Bnk of Jpn Review 2014-E-3 Innovtion in Retil Pyment Services in Mjor Economies Retil Pyment Systems Group Pyment nd Settlement Systems Deprtment Novemer 2014 Mjor economies hve emrked on vrious innovtive mens for enhncing retil pyment services. These include such mesures s rel-time settlement of nk trnsfers nd linking remittnce informtion with pyment informtion for finncil electronic dt interchnge (EDI). In Jpn, menwhile, the government relesed the revised Jpn Revitliztion Strtegy in June 2014, which includes enhncement of the pyment nd settlement system to mke finncil mrkets more efficient. When introducing such mesures, it is importnt to tke stock of recent developments in mjor economies, nd to improve rel-time nk trnsfers nd chieve finncil EDI while considering the sitution in Jpn. The Bnk of Jpn will help finncil institutions nd other stkeholders steer such inititives to enhnce retil pyment services, nd will collorte with the Jpnese government. Introduction People receive nd deliver products nd services every dy, engging in economic ctivities which involve mking nd receiving pyments. In these ctivities, nk trnsfers re often used s one of mjor pyment methods. Regrding nk trnsfer rrngements in Jpn, internk settlement tkes plce through the Bnk of Jpn Finncil Network System (BOJ-NET) in which net positions re clculted y nother system, clled the Zengin Dt Telecommuniction System (Zengin System, Chrt 1). In 2013, the Zengin System hndled dily verge volume of 6 million trnsctions, while the dily clering vlue verged 11.7 trillion yen. Thus, lmost 2.5 percent [Chrt 1] Bnk Trnsfer Arrngements in Jpn Pyer (individul X) Deposit (X s ccount) ( s ccount) Internk settlement Delivery of products nd services Zengin System Zengin-net s ccount BOJ-NET Net positions Internk settlement Pyee (firm Y) Withdrw (Y s ccount) ( s ccount) of Jpn s nnul GDP is settled y the Zengin System. In providing pyment mens, nks ply the importnt role of providing pyment services. Recently, new developments hve emerged in mjor economies which hve emrked on enhncing these services. In Jpn, the government s revised Jpn Revitliztion Strtegy relesed in June 2014 includes enhncement of the pyment nd settlement system, with the im of mking finncil mrkets more efficient. The strtegy includes whether to improve rel-time nk trnsfers tht would enle eneficiry s ccount to e credited in rel time nd whether to llow the remittnce informtion, including the detils of usiness trnsctions, to e incorported in pyment instruction to chieve finncil EDI. When improving rel-time nk trnsfers nd chieving finncil EDI in Jpn, it is importnt to tke stock of recent developments in mjor economies where similr inititives re lredy under wy. Accordingly, this rticle focuses on the following issues. Regrding rel-time nk trnsfers, we focus on progress in the United Kingdom, Sweden, nd Singpore. With respect to the doption of finncil EDI, we highlight the Single Euro Pyments Are (SEPA) which ecme fully opertionl on August 1, 2014. Briefly, the trends in these countries cn e summrized s follows. In the short run, they re 1
likely to improve the qulity of pyment services nd promote their stndrdiztion. In the medium to long run, they re likely to consolidte the finncil infrstructure which llows ll stges of usiness trnsctions -- from purchse order to funds settlement -- to e performed electroniclly, thus reducing costs, prticulrly for end users. Furthermore, y utilizing wide rnge of customer informtion, nks will e le to provide more comprehensive finncil services, generting new usiness opportunities for them s well s their customers. Finlly, we discuss the implictions of our findings for Jpn. Concept of enhncing pyment services In this rticle, mong the vrious mesures to enhnce pyment services, we focus on two spects. First is rel-time 24/7 nk trnsfers, which provide pyment services to nk customers 24 hours dy, 7 dys week, including evenings, weekends, nd holidys, nd so they re clled 24/7 services. In such finncil services, eneficiry s nk ccount cn e credited in rel time; it normlly tkes few seconds, or few minutes t most, from pyment initition to vilility of funds. The Fster Pyments Service (FPS) of the United Kingdom is pioneer in providing 24/7 services, which they strted discussing in 2003 nd lunched in 2008. In 2012, Sweden lunched the Pyments in Rel Time (PRT) nd in Mrch 2014, Singpore initited the Fst nd Secure Trnsfers (FAST). Austrli is lso expected to lunch 24/7 services sed on pltform clled the New Pyments Pltform (NPP) in the second hlf of 2016. The second mesure in enhncing pyment services is the utiliztion of remittnce informtion in domestic nk trnsfers. Businesses hve lredy een electroniclly exchnging remittnce informtion such s purchse nd sles orders y leverging the development of internet technologies. A frmework tht links such remittnce informtion with pyment informtion (e.g., informtion relted to eneficiry s nk ccount nd the pyment dte) nd exchnges these dt electroniclly is clled finncil EDI (Chrt 2). In other words, the rrngement ims to process ll stges of trnsction, from purchse order to funds settlement, electroniclly, thus chieving stright through processing (STP). By implementing finncil EDI, firms re likely to utomte ccounts receivle reconcilition from existing processes tht re hndled mnully. In Europe, the finncil infrstructure hs een developed to chieve finncil EDI. Only pyment informtion Buyer Confirmtion Pyment order [Chrt 2] Use of Finncil EDI Finncil EDI Buyer s nk Only remittnce informtion Pyment informtion Remittnce informtion Internk Settlement System Seller Sles invoice Developments in mjor economies Only remittnce informtion Accounts receivle reconcilition Importnce of enhncing pyment services Mjor economies hve emrked on vrious inititives to enhnce retil pyment services. The question is: wht re the enefits of these enhncements to individuls nd firms s end users nd nks s service providers? First, from the perspective of households nd usinesses, 24/7 services will improve the efficiency of mnging funds. The services enle eneficiries to use funds in rel time, nd enle senders to use the ville funds up to the lst minute. As for finncil EDI, there re two spects. In the short run, firms need to invest to develop systems to hndle stndrdized formts for exchnging trding dt electroniclly. However, in the long run, they cn enjoy enefits such s lower operting costs y linking remittnce informtion with pyment informtion. For exmple, firms will e le to utomte the reconcilition of mnul processing of ccounts receivle. In sum, it is importnt for usinesses, s users of pyment services, to lnce the short-term costs of developing systems with the medium- to long-term enefits rising from improved efficiency of existing opertions. Accordingly, the Europen Pyments Council (EPC) is supporting nd ctively promoting the SEPA. Specificlly, the EPC hs pulished cse studies highlighting the lessons lernt from stkeholders tht hve completed the migrtion to the SEPA nd hs stted tht mny mngers report tht the enefits from the SEPA migrtion fr exceeded the investment cost. 1 Seller s nk STP Hndled mnully 2
Second, from the perspective of nks, lthough implementing 24/7 services nd finncil EDI requires dditionl investment in systems, the experience of some countries shows tht it is difficult to pss the cost of providing these services on to their customers. Nevertheless, there re still enefits for nks in providing pyment services s their core usiness, promoting the use of finncil infrstructure, nd meeting the potentil needs of their customers. For exmple, nks my e le to provide dvisory services, sed on their customers csh flow dt, support corporte finncing sed on remittnce nd pyment informtion, nd propose finncil services to their clients who my e contemplting expnding overses. In the long run, these inititives re expected to oost the profitility of nks. 24/7 service Keeping in mind the importnce of enhncing pyment services s descried ove, this section focuses on the min fetures of 24/7 services, sed on the experience of the United Kingdom, Singpore, nd Sweden (Chrt 3). 2 First, 24/7 services re often provided y the privte sector funded y nks, or nkers ssocitions, nd thus the mjor nks in respective economies ct s driving force to spred the services. In the United Kingdom, 10 mjor nks, ccounting for out 95% of the domestic pyment volume, re direct prticipnts in the FPS. 3 Other finncil institutions -- pproximtely 300 institutions, including smll nd medium-sized finncil institutions, nd pyment service providers -- re indirect prticipnts, relying on the direct prticipnts to settle funds through the FPS. 4 While some indirect prticipnts provide 24/7 services, others do not seem to provide such services nd vrious conditions re set, such s cut-off time for sme-dy settlement nd the vilility of services only on weekdys. 5 In sum, while the qulity of 24/7 services depends on respective prticipnts usiness strtegies, the FPS is flexile enough to ccommodte the diverse needs of finncil institutions so tht lmost ll of them cn prticipte in the FPS network. Turning to Singpore, 14 mjor nks, which process most of the trnsctions of the existing pyment system, currently prticipte in the FAST nd provide 24/7 services, wheres pproximtely 110 other finncil institutions hve not joined the system. Second, in terms of ccessiility of 24/7 services, nks tend to set n upper limit on the vlue of funds [Chrt 3] 24/7 Services in Mjor Economies Lunch of Service Hours of Opertion United Kingdom (FPS) Singpore (FAST) Sweden (PRT) Jpn (Zengin System) 2008 2014 2012 24/7 24/7 24/7 Weekdys 8:30-15:30 Note: The PRT of Sweden is used only for P2P moile pyment. Sources: Documents disclosed y respective countries. trnsferred t one time, specilizing in smll-vlue pyments. The FPS sets the limit t 100,000 pounds (out 18 million yen) for ech trnsction, nd the FAST sets the limit t 10,000 Singpore dollrs (out 900,000 yen). In Sweden, the limit vries mong prticipting nks, rnging etween 10,000 nd 100,000 Swedish kron (out 150,000 to 1.5 million yen) for ech trnsction. Regrding service fees, most countries pper to provide services for free for individuls, ut chrge some fees for usiness customers. 6 As for the chnnels through which 24/7 services cn e ccessed, vrious options re provided, such s moile nking, internet nking, telephone nking, ATMs, nd rnches. Among these chnnels, services using the customer s moile phone numer re spreding in the United Kingdom nd Sweden to improve service qulity (see BOX for moile nking in the United Kingdom). Third, regrding the settlement method, the internk funds clering system provided y the privte sector nd the rel-time settlement vi current ccounts t the centrl nk hve een effectively comined to provide 24/7 services (Chrt 4). In the United Kingdom nd Singpore, funds re credited to pyee in rel time using the clering system provided y the privte sector. Internk settlements re conducted severl times dy on weekdys y using net positions clculted for ech settlement cycle, nd nk trnsfers re settled through the current ccounts t the centrl nk (deferred net settlement <DNS> model). In the United Kingdom, the cut off times for settlement re currently 7:00 m, 12:45 pm, nd 3:30 pm, nd nk trnsfers re settled through the current ccounts held t the Bnk of Englnd, with view to lncing efficiency nd sfety. In Sweden, settlements re processed in rel time nd on gross sis, s long s prticipnts hve trnsferred necessry funds to e settled in the centrl nk ccounts in dvnce (privte RTGS model). 3
[Chrt 4] Settlement Method of 24/7 Services in Mjor Economies UK, Singpore (DNS model) Rel-time credit/deit Privte-sector clering system Clcultion of net positions (severl times dy) Net positions Centrl nk current ccounts Privte-sector clering system Finl Settlement Sweden (Privte RTGS model) Privte-sector clering system Rel-time settlement within the funds trnsferred in the centrl nk ccounts in dvnce Rel-time credit/deit Linked Centrl nk current ccounts Privte-sector clering system Trnsfer of funds Fourth, regrding risk mngement, the United Kingdom nd Singpore, which use the DNS model, dopt vrious mesures to ddress risks rising from n increse of unsettled funds. These mesures include short position limit nd liquidity provision scheme to cover losses in cse of the defult of prticipting nk with the lrgest short position limit. In ddition, rule is often set to llocte the losses which rise from the defult of prticipting nk mong the prticipnts within the rnge of collterl sumitted eforehnd. Lstly, regrding the usge of 24/7 services, the numer of users is incresing stedily thnks to the convenience of the services. In the United Kingdom, the FPS is expnding continuously, reching 87 million trnsctions worth 72 illion pounds (out 13 trillion yen) in August 2014 (Chrt 5). The motivtion ehind these services, however, differs Sources: Documents disclosed y respective countries. 90 80 70 60 50 40 30 20 10 0 [Chrt 5] Volume of Clerings in the Fster Pyments (Millions) Stnding Order Pyments Forwrd Dted Pyments Single Immedite Pyments My-08 My-09 My-10 My-11 My-12 My-13 My-14 Source: Fster Pyments. mrkedly from country to country. In the United Kingdom, the government ws initilly the driving force to improve nking services, while in Sweden, the nking sector took the led in introducing 24/7 services due to fierce competition with non-nking institutions. In ny cse, the efforts of ll stkeholders, who sought etter nking to meet the needs of customers, mde such services possile. Finncil EDI As for the implementtion of finncil EDI, it is necessry to set up frmework to hrmonize the interests of the finncil sector nd the usiness sector. This section first explins recent developments in Europe under the Single Euro Pyments Are (SEPA), n innovtive inititive to tke dvntge of finncil EDI. It then touches on the progress in the United Sttes (Chrt 6). 7 [Chrt 6] Numer of Chrcters Allowed in Pyment Messge Formt Country United Sttes Europe United Kingdom Jpn Nme of System Type of Messge Formt Numer of Chrcters ACH Originl 80 chrcters (with itertion) All nk trnsfers in SEPA zone FPS Zengin System ISO20022 (XML) ISO8583 (fixed field) Zengin formt 140 chrcters 140 chrcters The SEPA is project to hrmonize the wy in which retil pyments in euros re mde nd processed. The gol is to mke euro pyments s or ISO20022 (XML) Sources: Documents disclosed y respective countries. Zengin formt: 20 chrcters or XML: 140 chrcters (with itertion) [Chrt 7] Migrtion of SEPA Credit Trnsfers (SCT) (Millions) 900 800 700 600 500 400 300 200 100 0 Volume of SCT per month (LHS) % of SCT over totl trnsctions Mr-08 Mr-11 Apr-13 Jul-13 Oct-13 Jn-14 Apr-14 Jul-14 Source: Europen Centrl Bnk. (%) 100 90 80 70 60 50 40 30 20 10 0 4
[BOX] Moile Bnking in the United Kingdom In the United Kingdom, the Pyments Council hs een working on new pyment service using moile phone numers insted of nk ccount numers. 10 Since April 2014, new service clled Pym hs strted with the prticiption of 9 mjor nks. In order to use this service, customer registers moile phone numer linked to their nk ccount in dvnce, nd the informtion linking the ccount with the moile phone numer is shred mong the prticipting nks in the Pym. The pyer cn request nk trnsfer vi the FPS simply y entering the eneficiry s phone numer nd the vlue of the pyment into the moile pyment ppliction offered y the nks. How the Pym Works Sources: Pym Moile Pyments (http://www.pym.co.uk/) nd Fster Pyments (http://www.fsterpyments.org.uk/). efficient nd sfe s possile, enling cshless pyments to e mde to nyone nywhere in Europe. In order to chieve this gol, the SEPA developed set of pyment instruments under the common stndrds of ISO20022 XML, nd progress hs lredy een mde. With the dedline for migrting to the SEPA instruments set on August 1, the SEPA credit trnsfers -- trnsctions processed in the SEPA formt -- reched s high s 99.4 percent in August 2014 (Chrt 7). While the SEPA requires its scheme prticipnts (i.e., finncil institutions) to comply with its stndrds, it ppers some smll to medium-sized enterprises re not yet fully complint with the ISO20022 XML formt. Aginst such ckground, nks nd service providers hve een providing their customers with services which convert the remittnce informtion from the old formt to the ISO20022 XML formt. Such services will enle the SEPA to spred to the rel economy of respective countries. 8 In sum, the SEPA is grnd project which hs een worked on y stkeholders for more thn 10 yers, with the im of mximizing the enefits stemming from the single currency. While it took some time for the privte sector to voluntrily stndrdize dt formts tht were complint with the SEPA, the regultion -- often referred to s the SEPA end-dte regultion -- ws susequently introduced to ccelerte the implementtion of the SEPA pyment schemes nd stndrds. Tht sid, the SEPA enles customers to centrlize their ccounts nd liquidity, nd to enjoy the enefits of highly vlue-dded services in credit trnsfers, direct deits, nd crds. It lso provides importnt infrstructure tht mkes finncil EDI possile. In fct, the Europen Pyments Council hs pulished numer of cse studies highlighting the lessons lernt from stkeholders tht hve migrted to the SEPA pyment schemes nd stndrds. One exmple is Villeroy & Boch, glol cermics mnufcturing compny, which sys tht the enefits from the SEPA migrtion exceeded the investment cost ssocited with complying with the SEPA in just the first yer. 9 5
Going forwrd, Europen countries re looking into further mesures to mximize the enefits of the single currency pyments re. These include such mesures s tking dvntge of internet nd internet-sed technologies to store remittnce informtion in the cloud. Aprt from mesures tking plce in Europe, there hs een progress in other countries too. In the United Sttes, the utomted clering house (ACH) 11 uses its own formt, which is different from the interntionl common pltform ut llows remittnce informtion to e ttched to n invoice. So fr, however, this formt hs minly een used in commercil trnsctions etween lrge enterprises, due to lck of greement mong stkeholders on shring the cost of developing system for finncil EDI. In fct, recent survey showed tht more thn hlf of respondents were unwilling to invest in ccounting systems or tresury worksttion upgrdes to support the ility to send or receive wire pyments with extended remittnce informtion. 12 Aginst such ckground, the Federl Reserve (Fed) relesed document titled Pyment System Improvement -- Pulic Consulttion Pper, in which it clrified its strtegic direction in pyments, identifying improved speed, efficiency, nd sfety of the U.S. pyment system from end to end s n ojective. 13 It lso identified s desired outcome uiquitous system for ner-rel-time pyments, tht is, uiquitous electronic solution for mking retil pyments in which funds would e deited from the pyer nd mde ville in ner rel time to the pyee. A summry of industry feedck on how to improve the U.S. pyment system showed tht pproximtely three qurters of respondents greed with the desired outcomes specified in the consulttion pper. Thus, there hs een progress in some countries, prticulrly in Europe, to uild finncil infrstructure for exchnging electronic informtion, oth pyment informtion nd remittnce informtion, while seeking coopertion with usinesses. Looking hed, firms in Europe, prticulrly the lrge ones, re expected to enjoy the enefits of the SEPA, such s reduced nk chrges nd synchronized liquidity mngement. This my pose chllenge for Jpnese firms. To mintin their competitiveness ginst their peers overses, they will need to find wys to reduce costs ssocited with pyment trnsctions. Conclusion In Jpn, 24/7 services hve not een introduced. To e sure, nk trnsfers during dylight hours on weekdys re mde ville to the pyee lmost instntneously. By contrst, trnsctions on holidys or in the evenings re honored, ut the pyee must wit until the following working dy for the money to ecome ville. In terms of finncil EDI, the Zengin System moved its pltform to the 6th genertion in Novemer 2011, nd one of the new fetures ws to llow the ISO20022 XML formt s n option for trnsfer messges. 14 Nevertheless, ecuse the doption of this formt is not oligtory nd requires coordintion mong vrious stkeholders, neither nks nor their customers hve tken dvntge of the new formt. [Chrt 8] Demnd for 24/7 Services Likelihood of wnting nk trnsfers requested during weekend/holidy or on weekdy night to e settled in rel-time Weekend / Holidy No response Unlikely/ Somewht unlikely Likely/ Somewht likely 58.6% Weekdy night No response Unlikely/ Somewht unlikely Likely/ Somewht likely 62.3% Purpose(s) for which respondents would wnt nk trnsfers requested on weekdy night, or on weekend/holidy to e settled in rel-time Pyment of housing rents, pulic utility chrges, nd insurnce premiums Personl remittnces, such s to reltives nd friends Pyment for in-home shopping, including online shopping Business remittnces, such s to clients Pyment for online uctions Securities trding nd foreign exchnge trnsctions Pyment for chrged online services nd content, such s music, movies, nd gmes Other 土日祝日 Weekend/Holidy 平日夜間 Weekdy night (%) 0 20 40 60 Source: Bnk of Jpn, "Results of the 56th Opinion Survey on the Generl Pulic's Views nd Behvior (Decemer 2013 Survey). Aginst this ckground, the Jpnese government relesed the revised Jpn Revitliztion Strtegy in June 2014. The strtegy includes enhncement of the pyment nd settlement system such s the improvement of rel-time nk trnsfers nd the extensive use of finncil EDI y enhncing 6
coopertion etween industries nd finncil institutions. In ddition, ccording to the 56th Opinion Survey on the Generl Pulic s Views nd Behvior conducted y the Bnk of Jpn (Decemer 2013 Survey), out 60 percent of respondents re either likely or somewht likely to prefer nk trnsfers to e settled immeditely (Chrt 8). This suggests tht there is potentil demnd for 24/7 services in Jpn s well. At present, the Jpnese Bnkers Assocition nd the Jpnese Bnks Pyment Clering Network, which is responsile for mnging the Zengin System, re studying whether Jpn cn introduce 24/7 services nd implement finncil EDI, nd re expected to relese the results of their study y the end of this yer. 15 In light of such developments t home, it is importnt to tke stock of recent developments in mjor economies nd proceed with oth the improvement of rel-time nk trnsfers nd the chievement of finncil EDI while tking the sitution in Jpn into considertion. The Bnk of Jpn will help finncil institutions nd other stkeholders steer such inititives to enhnce retil pyment services nd will collorte with the Jpnese government. 1 See the EPC Newsletter on the EPC wesite for detils. It includes interviews with the SEPA stkeholders descriing the enefits of the SEPA. 2 Mexico nd Switzerlnd lso provide high-qulity pyment services, ut re not included in this rticle s the pyment services in these countries re limited to the dytime on weekdys. 3 A New UK Pyments Regime -- A Finextr Reserch Survey, sponsored y VocLink, Septemer 2014. 4 In generl, there re three types of prticipnts for the FPS: (i) memer who prticiptes directly in the FPS, hndles oth the sending nd receiving of pyment instructions, nd the processing of funds settlement, y themselves; (ii) direct gency who hndles only the sending nd receiving of pyment instructions y themselves, nd rely on memers for funds settlement; nd (iii) indirect gency who relies on memers for oth the sending nd receiving of pyment instructions nd the funds settlement. Both memers nd direct gencies re oliged to provide 24/7 services. 5 In the United Kingdom, some domestic nks nd uilding societies prticipte in the FPS s indirect gencies, ut the contents of the services they provide, such s cut-off time for pyment instructions or the timing of crediting funds, differ significntly. Reltively lrge uilding societies provide services in which funds re credited in rnge of within two hours to y the end of the next working dy regrdless of the dy when pyment instructions were sent. 6 In the United Kingdom, services re provided for free for individuls. In Singpore nd Sweden, these re lso provided for free for individuls for certin periods of time. 7 Note tht the SEPA not only focuses on finncil EDI, ut lso stndrdiztion nd unifiction of overll pyment schemes including credit trnsfers, direct deits, nd crds. 8 Some nks nd service providers in Europe hve een providing services in which their customers cn sumit pyment files in the old formt nd they will convert those files to the SEPA formt. Other nks provide the list of externl service providers which offer rnge of different SEPA conversion services. 9 EPC Newsletter, Issue 14 - April 2012. 10 The Pyments Council ws estlished in 2007 with three core ojectives: (i) to hve strtegic vision for pyments nd led the future development of coopertive pyment services, (ii) to ensure open, ccountle, nd trnsprent pyment systems, nd (iii) to ensure the opertionl efficiency, effectiveness, nd integrity of pyment services. 11 ACH, introduced in the 1970s, is computer-sed clering nd settlement fcility which processes the exchnge of electronic trnsctions etween depository institutions nd their customers s well s etween those institutions. 12 2013 AFP Electronic Pyments Survey, Novemer 2013. 13 Pyment System Improvement -- Pulic Consulttion Pper, Federl Reserve Finncil Services, Septemer 2013. 14 Developments in Jpn in the re of finncil EDI cn e found in the following documents (in Jpnese): Study Group Report on the Enhncement of Corporte Pyment Services, Jpnese Bnkers Assocition, April 2012; nd Finncil Institutions Efforts to Enhnce Corporte Pyment Services, Bnk of Jpn Review Series, 11-J-9, August 2011. In July 2013, the Bnk of Jpn s Center for Advnced Finncil Technology held workshop, in which prticipnts discussed how to use remittnce informtion to enhnce commercil nd industril finncing ctivity. The minutes of the workshop re ville on the Bnk of Jpn s wesite. Currently, the study group which exmines linking remittnce informtion with pyment informtion is conducting joint experiment. 15 On Octoer 16, 2014, the Jpnese Bnkers Assocition nd the Jpnese Bnks Pyment Clering Network relesed n interim report (in Jpnese) which exmined whether to extend the operting hours of the Zengin System nd how to mke use of finncil EDI. Regrding the extension of operting hours, the report listed two options: (i) extending the operting hours of the current system with ll memer institutions; nd (ii) extending those hours including Sturdys, Sundys, nd holidys y uilding new system. It would consider either of these options or the comintion of the two. As for the implementtion of finncil EDI, it will continue to study fesile scheme nd timescle for its implementtion while considering the results of the study group s joint experiment (see footnote 14) nd dditionl studies. Bnk of Jpn Review is pulished y the Bnk of Jpn to explin recent economic nd finncil topics for wide rnge of reders. This report, 2014-E-3, is trnsltion of the originl Jpnese version, 2014-J-7, pulished in Novemer 2014. If you hve comments or questions, plese contct Pyment nd Settlement Systems Deprtment (Tel: 81-3-3279-1111). Bnk of Jpn Review nd Bnk of Jpn Working Pper cn e otined through the Bnk of Jpn s wesite (http://www.oj.or.jp/en). 7