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In a bid to reinforce its monetary control, the Bank of Japan will adopt a new tool to open market operations as early as this month by using the expanding market for bond repurchase agreements, the BOJ announced Friday.

Under the new scheme, the BOJ can provide funds to commercial financial institutions as collateral for government bonds that the BOJ will borrow from them. This system is already used extensively by the U.S. Federal Reserve Fund and comes as the operation of bills in the market is shrinking as private firms use fewer bills for settlements.

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