I hereby promulgate the Law for Partial Amendments to the Bank of Japan Law.
Signed:HIROHITO, Seal of the Emperor
This third day of the sixth month of the twenty-fourth year of Showa (June 3, 1949)
Prime Minister YOSHIDA Shigeru
Law for Partial Amendments to the Bank of Japan Law
The Bank of Japan Law (Law No.67 of 1942) shall be partially amended as follows:
Next to Article 9 paragraph 1 item (4), the following one item shall be added:
(4-2) Matters relating to the Policy Board.
The following one Chapter shall be added next to Chapter 1:
Chapter I-(2) Policy Board
Article 13-(2) There shall be established a Policy Board in the Bank of Japan, and the Policy Board shall be authorized and empowered to formulate, direct or supervise the execution by the Bank of Japan as prescribed in Article 13-(3) item (1), basic monetary, credit control and other banking policies pertaining to the function of the Bank of Japan as the central bank and pertaining to its contractual relations with other banking institutions so as to meet the requirements of the national economy.
Article 13-(3). The Policy Board shall be charged with the following matters:
(1) Decision of the basic policy for the performance of business of the Bank of Japan, to be administered by the officers and staff prescribed in Chapter II;
(2) Decision and alteration of the discount rates prescribed in Article 20 item (1) and those of rates of interest on loans prescribed in item (2) of the same Article;
(3) Decision and alteration of kind and condition of bills to be rediscounted by the Bank of Japan in accordance with provisions of Article 20 item (1) and those of kind, condition and value of collaterals to be put on loans made by the Bank of Japan in accordance with provisions of item (2) of the same Article.
(4) Decision and alteration of kind, condition and value of, or time to start or suspend the open market dealing, either from or to domestic financial institutions, foreign banks, firms, corporations or individuals;in cable transfers, bankers'acceptances and bills of exchange, and in the securities to be purchased or sold by the Bank of Japan in accordance with provisions of Article 20 item (5);
(5) Decision, alteration and abolition of maximum rate of interest of the financial institution prescribed in Article 2 of the Temporary Law of Interest Rate Adjustment;
(6) Alteration of ratio of deposit with the Bank of Japan by financial institutions having a contractual relationship with the Bank of Japan;
(7) Decision and alteration of controls pertaining to loans and investments, kind, condition and limit to the value of collaterals to be put on loans made by banks (exclusive of the Bank of Japan), trust companies, insurance companies, mujin companies, Central Bank for Agriculture and Forestry, Central Bank for Commercial and Industrial Associations and other associations who accept deposit, and to security dealers (meaning those provided for in Article 2 paragraph 9 of the Securities and Exchange Law);
(8) Decision of an estimation of the expenditures, an appraisal of assets, a settlement and other accounting of Bank of Japan;
(9) Besides those enumerated above, such policy matters as pertain to credit control and examination of financial institutions as are entrusted to the Policy Board by virtue of other Laws and/or contractual relationship;
(10) Report annually to the Diet through the competent Minister with respect to:
a. The condition and operation of financial institutions;
b. Necessary changes in laws;
c. Changes in supervisory policies during the year;
d. Policy actions taken and reasons therefor.
Article 13-(4). The Policy Board shall be composed of seven members.
The members of the Board shall be as follows:
(1) The Governor of the Bank of Japan;
(2) A person representing the Miinstry of Finance;
(3) A person representing the Economic Stabilization Board;
(4) Two persons of outstanding experience and knowledge of financial affairs. One experienced and having knowledge of prefectural banks and one experienced and having knowledge of large city banks;
(5) A person of outstanding experience and knowledge for commercial and industrial affairs;
(6) A person of outstanding experience and knowledge of agricultural affairs.
Those members who come under items (4), (5) and (6) of the preceding paragraph (hereinafter referred to as "appointed members" ) shall be appointed by the Cabinet with the approval of both Houses.
The appointed members shall be treated as those who engage in public service by virtue of laws, and others.
The expenses necessary for the Policy Board, such as pay for the appointed members, etc. shall be paid by the Bank of Japan.
Article 13-(5). The tenure of office of appointed members shall be four years and the tenure of office of a member who fills a vacancy shall be the remainder of his predecessors.
The members may be reappointed.
Notwithstanding the provisions of paragraph 1, appointed members, whose tenure of office expires while the Diet is out of session or the House of Representatives is dissolved, shall hold their office till the Cabinet nominates appointed members with the approval of the Diet in the earliest session following the expiration.
Members who have served less than full four years tenure shall be ineligible to join any financial institution supervised for a period of two years after their retirement.
Article 13-(6). Except in cases where any appointed member falls under the provision of any of the following items, any appointed member shall not be dismissed against his will during his tenure of office:
(1) In case he has been adjudicated incompetency, quasi-incompetency or bankruptcy;
(2) In case he has been sentenced to imprisonment or any other heavier punishment;
(3) In case the Cabinet has deemed him to be incapable of discharging his duties because of physical or mental disabilities;
(4) In case the Cabinet has deemed him to be disqualified for membership owing to his violation of his official duties.
In case the appointed member falls under any one of the preceding categories, the Cabinet shall remove him from office.
Article 13-(7). There shall be a chairman in the Policy Board.
The chairman shall be elected by mutual vote of members, within thirty days after the establishment of the Policy Board or occurence of a vacancy of the chairman. When failed in this, the Cabinet shall name the chairman from among the members.
The chairman shall preside over the business of and represent the Policy Board.
Article 13-(8). The member mentioned in Article 13-(4) paragraph 2 items (2) and (3) shall have no right of voting at the meeting of the Policy Board.
The proceedings of the Policy Board shall be decided by majority votes of the members who have right of voting.
Article 13-(9). The appointed members shall not, during their terms of office engage in any of the following activities:
(1) To become a candidate for the National Diet or the assembly of a local public body or any elective public office or actively engage in political activities;
(2) To engage in other remunerative work except when permitted by the Cabinet;
(3) To engage in business or other occupations for pecuniary gain.
In Article 15 paragraph 1, "control its entire operations" shall be amended as "execute the general business according to the policy decided by the Policy Board" ;and in paragraph 3 of the said Article, "administer" shall be amended as "execute" .
In Article 20 item (5), "or such bonds or debentures as permitted by the competent Minister" shall be amended as "and other bonds or debentures" .
In Article 21 paragraph 1, "obtain the permission of the competent Minister" shall be amended as "make public to that effect" ;and paragraph 2 of said Article shall be deleted.
In Article 32 paragraph 2 item (4), "bonds or debentures approved by the competent Minister" shall be amended as "other bonds or debentures" .
Supplementary Provisions:
1. This Law shall come into force as from the date of its promulgation.
2. With regard to the appointment of the first term appointed members of the Policy Board, only in the case where the Diet is out of session, it is enough to obtain the approval of both Houses in the earliest session following their appointment notwithstanding, the provisions of Article 13-(4) paragrpah 3.
3. The Cabinet shall, in case the approval of both Houses provided for in the preceding paragraph is obtained, discharge the members.
4. The tenure of office of the first term appointed members of the Policy Board shall, notwithstanding the provision of text of Article 13-(5) paragraph 1, respectively be one year, two years and three years for each.
5. The tenure of office of each of the members stipulated in the preceding paragraph shall be designated by the Cabinet.
6. The appointment of the first term appointed members of the Policy Board shall be made not later than sixty days from the date of promulgation of this Law.
7. The Temporary Law of Interest Rate Adjustment (Law No.181 of 1947) shall be partially amended as follows:
In Articles 2, 3 and 6, "the Governor of the Bank of Japan" shall be amended as "the Policy Board of the Bank of Japan."