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The Bank of Japan said Friday that it will make two-, four-, five- and six-year government notes subject to its regular market operations staring next month.

The central bank so far has used only short-term securities, and 10- and 20-year government bonds among state debt instruments for its regular market operations to pump liquidity into the banking system.

The BOJ also said it will increase the number of financial institutions subject to its bill-buying operations to 40 from the current 30 and extend the maximum maturity of bills subject to such operations to six months from the current three.

The bank also said it will offer rates for bill-buying operations in 0.001 percentage point increments instead of the current 0.01.

It expects these measures to help prevent it from failing to inject target sums of liquidity into the banking system through its operations as seen in recent actions, BOJ officials said.

BOJ stays the course

The Bank of Japan’s Policy Board voted Friday to maintain the current quantitative monetary easing to ensure the stability of Japan’s financial system and help achieve a recovery, the BOJ said.

Under the policy, the central bank will keep the level of cash reserves in current accounts held at the BOJ by financial institutions in Japan at around 5 trillion yen, it said.

The policy-setting board was also expected to discuss the central bank’s difficulties in boosting liquidity, as the BOJ failed Thursday to funnel liquidity into the banking system for the sixth consecutive business day.

The combined sum of government bonds offered for sale by banks has fallen short of the sum the BOJ plans to buy.

On March 19, the board adopted a policy of keeping cash levels in current accounts at 5 trillion yen, necessitating the addition of 1 trillion yen to the then combined liquidity amount in the accounts of about 4 trillion yen.

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