Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

JAPAN

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of December 31, 2004)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: April 1, 1964.
Exchange Arrangement
CurrencyThe currency of Japan is the Japanese yen.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate of the Japanese yen is determined on the basis of supply and demand in the foreign exchange market. However, the authorities intervene when necessary in order to counter disorderly conditions in the market. The principal intervention currency is the dollar.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketThere are no officially set rates in the forward market, and forward exchange transactions are based on free market rates.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangementsNo.
Administration of controlThe exchange and trade control system is operated mainly by the MOF, the Ministry of Economy, Trade, and Industry (METI), and the Bank of Japan, which acts as the government’s agent. Import- and export-reporting requirements are handled by the METI.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)On October 7, 2004, the authorities notifed the IMF that measures have been taken to freeze funds and other assets of certain individuals and entities in accordance with the relevant UN Security Council resolutions.
In accordance with UN sanctionsPermission from the MOF and the METI is required for payments to the Taliban, individuals, groups, and organizations associated with terrorism. Japan has frozen the funds and other assets of (1) organizations, high officials, and persons affiliated with the former Iraq regime in accordance with a UN Security Council resolution; (2) former Yugoslavian President Slobodan Milosevic and affiliated persons; and (3) former Liberian President Charles Taylor, his immediate family, and senior officials of the former Taylor regime in accordance with a UN resolution.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)Exports and imports of gold exceeding 1 kilogram in total weight must be declared to the MOF through the customs authorities.
Controls on external tradeYes.
Controls on exports and imports of banknotesExports and imports of banknotes (including checks, traveler’s checks, promissory notes, and securities) in both domestic and foreign currency exceeding the equivalent of ¥1 million in value must be declared to the MOF through the customs authorities.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresCertain goods are subject to import restrictions under the Import Control Order for reasons of national security, public health, and environmental and moral protection. Imports of these goods require prior approval from the METI. For the restricted items, authorization from the METI and an import quota certificate are required. For the importation of certain other goods from specific countries or shipping areas, individual authorization must be obtained from the METI. Import settlements effected under special methods require authorization from the METI.
Negative listYes.
Open general licensesYes.
Licenses with quotasYes.
Import taxes and/or tariffsYes.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport restrictions may be applied either globally or to certain destinations, and these may cover export volume, export prices, or other conditions. Exports of specified raw materials for foreign processing and reimportation require individual licenses. Certain goods are subject to export restrictions under the Export Control Order for reasons of international security and environmental protection.
Without quotasYes.
With quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Outward direct investmentOutward direct investments by residents in a limited number of industries, such as the manufacture of arms, require prior notice.
Inward direct investmentInward direct investments by foreign investors in a limited number of industries, such as the manufacture of arms, require prior notice.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutionsNo.
Provisions specific to institutional investors
Limits (max.) on investment portfolio held abroadThe limits are (1) 30% of total assets for insurance companies purchasing foreign currency–denominated assets; and (2) 20% of the reserve funds issued by nonresidents for bond holdings by the Post Office Insurance Fund.
Other controls imposed by securities lawsYes.
Changes During 2004
Arrangements for payments and receiptsOctober 7. The authorities notified the IMF that measures have been taken to freeze funds and other assets of certain individuals and entities in accordance with the relevant UN Security Council resolutions.

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