Chapter

Appendix III

Author(s):
Yusuru Ozeki, and George Tavlas
Published Date:
January 1992
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Table 28.Chronology of Controls on Foreign Investment by Institutional Investors
Date(s)Measure
I. Life Insurance Companies
(Total assets = ¥ 130.2 trillion as of March 1991)
Controls on ratio of foreign investments to total assets
1971Acquisition of foreign securities (i.e., securities issued by nonresidents, including yen-denominated foreign bonds) was authorized up to 10 percent of total assets. Resident issues of foreign-currency bonds and foreign-currency deposits were not affected by this limit.1
March 1986Acquisition of foreign securities was authorized up to 25 percent of total assets. Acquisition of currency assets (including foreign-currency deposits and foreign-currency bonds issued by residents, but excluding forward-covered investments) was also authorized up to 25 percent of total assets.
August 1986The above limits were raised from 25 percent of total assets to 30 percent of total assets.
Controls on increases in foreign investments
April 1982Each new acquisition of foreign securities was limited to 5 percent of the increase in total assets.
May 1982-December 1982The limit was raised to 10 percent of the increase in total assets.
April 1983-March 1986The limit was raised further to 20 percent of the increase in total assets.
April 1986-August 1986The limit was raised further to 40 percent of the increase in total assets.
March 1986All controls were abolished.
II. Casualty Insurance Companies
(Total assets = ¥ 26.2 trillion as of March 1991)
Controls on ratio of foreign investments to total assets
Same, in principle, as those applicable to life insurance companies.
Controls on increases in foreign investments
Early 1980s-August 1986Controls existed that limited the new acquisition of foreign securities, including foreign equities and bonds denominated in foreign currency that are issued by residents, to less than certain proportions of the increase in total assets.2
August 1986All controls were abolished.
III. Pension Trusts
(Total assets = ¥ 21.7 trillion as of March 1991)
Controls on ratio of foreign investments to total assets
January 1981Assets denominated in foreign currency, including deposits, were limited to 10 percent of total assets. Foreign bonds denominated in yen were not affected by this limit.
April 1986The limit was raised to 25 percent of total assets.
August 1986The limit was raised further to 30 percent of total assets.
Controls on increases in foreign investments
November 1983Certain controls on increases in foreign-currency assets were introduced.
April 1986Each acquisition of foreign-currency assets was limited to 40 percent of the increase in total assets.
August 1986All controls were abolished.
IV. Loan Trusts and Jointly Managed Money Trusts3
(Total assets (for loan trusts exclusively) = ¥ 48.2 trillion as of March 1991)
Controls on ratio of foreign investments to total assets4
February 1986Foreign bonds were limited to less than 1 percent.
June 1986The limit was raised to 3 percent.
February 1987The limit was raised further to 5 percent.
V. Specified-money-in-trusts (Tokutei Kinsen Shintaku)5
(Total assets = ¥ 11 trillion as of March 1991)
No legal restrictions exist on the acquisition of foreign securities.
VI. Securities Investment Trusts
(Net assets = ¥ 44.9 trillion as of June 1991)
No limits exist on the acquisition of foreign securities.
VII. Postal Life Insurance6
(Total assets = ¥ 46.4 trillion as of March 1991)
Controls on ratio of foreign investments to total assets
May 1983Acquisition of foreign bonds, including yen-denominated foreign bonds, was authorized up to 10 percent of total assets.
June 1987The limit was raised to 20 percent.
Controls on increases in foreign assets
May 1983-March 1986Acquisition of foreign securities was limited to 10 percent of the increase in assets.
April 1986-September 1986The limit was raised to 20 percent of the increase in assets.
VIII. Trust Fund Bureau7
(Total assets = ¥ 238.4 trillion as of December 1990)
Controls on ratio of foreign investments to total assets
April 1987Foreign bonds (including yen-denominated foreign bonds) were limited to 10 percent of total assets.
IX. Authorized Foreign Exchange Banks
There are no controls on foreign investments per se. However, each bank faces individual limits on its overall spot-forward exchange position (its net outstanding foreign assets or liabilities, including forward positions, converted into dollars). Net positions are not permitted to exceed these limits at the end of any business day. Since October 1986, foreign securities investments held for more than one year without forward cover may, up to certain amounts, be excluded from overall position limits. These amounts are 3 percent of total assets for long-term credit banks and 0.5 percent of total assets for other banks.
Sources: Fukao (1990); data provided by Japan, Ministry of Finance.

Foreign loans, denominated in yen, were authorized up to 10 percent of total assets.

Including foreign equities and bonds denominated in foreign currency that are issued by residents.

Foreign investment was not permitted before February 1986. Equity investments are not authorized.

Equity holdings prohibited. Foreign investment was not permitted before May 1983.

These accounts are held at 17 banks, including foreign trust banks.

Equity holdings are not authorized. Foreign investment was not permitted before May 1983.

Equity holdings are not authorized. Foreign investment was not permitted before April 1987.

Sources: Fukao (1990); data provided by Japan, Ministry of Finance.

Foreign loans, denominated in yen, were authorized up to 10 percent of total assets.

Including foreign equities and bonds denominated in foreign currency that are issued by residents.

Foreign investment was not permitted before February 1986. Equity investments are not authorized.

Equity holdings prohibited. Foreign investment was not permitted before May 1983.

These accounts are held at 17 banks, including foreign trust banks.

Equity holdings are not authorized. Foreign investment was not permitted before May 1983.

Equity holdings are not authorized. Foreign investment was not permitted before April 1987.

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