--- title: "Japan money-market benchmark reform (TONA and the multi-rate world)" aliases: - "money-market/japan-money-market-benchmark-reform-tona" - "japan-money-market-benchmark-reform-tona" - "Japan interest rate benchmark reform" - "JPY LIBOR transition" - "TONA risk-free rate" - "日本円金利指標改革" - "円LIBOR移行" domain: "money-market" created: 2026-06-03 last_updated: 2026-07-30 last_tended: 2026-07-30 review_by: 2026-12-03 confidence: likely tags: [money-market, benchmark-reform, TONA, LIBOR-transition, risk-free-rate, BoJ] status: active sources: - "https://www.boj.or.jp/en/paym/market/jpy_cmte/index.htm" - "https://www.boj.or.jp/en/paym/market/sg/rfr1612c.pdf" - "https://www.boj.or.jp/en/finsys/libor/index.htm" - "https://www.boj.or.jp/en/statistics/market/short/mutan/index.htm" - "https://www.fsa.go.jp/en/news/2024/20240306/20240306.html" --- # Japan money-market benchmark reform (TONA and the multi-rate world) ## Wiki route This entry sits under [[money-market/INDEX|money-market index]]. Read it against [[money-market/japan-tibor-benchmark-rate|TIBOR]] for the surviving term benchmark and [[money-market/call-market-structure|Call market structure]] for the cash market that TONA is computed from; the derivative-pricing expression is [[derivatives/ois-tona-curve|the OIS TONA curve]]. ## TL;DR Japanese yen interest-rate benchmark reform replaced JPY LIBOR with a **risk-free rate (RFR)** anchored in the actual money market, while retaining a reformed term benchmark. The outcome is a deliberate **multi-rate world**: - **TONA (Tokyo Overnight Average Rate)** is the designated JPY risk-free rate. It is the Bank of Japan's volume-weighted average of **uncollateralized overnight call** transactions — i.e. it is computed directly from the cash market described in [[money-market/call-market-structure|call market structure]]. - **TIBOR** survives as a reformed, quote-based term benchmark (see [[money-market/japan-tibor-benchmark-rate|TIBOR]]), now without its Euroyen (Z-TIBOR) leg. - **JPY LIBOR** ceased: representative JPY LIBOR ended at end-2021, and synthetic JPY LIBOR was wound down by end-2023. For FinWiki, this entry is the money-market-side narrative of who reformed what and why the call market sits at the center of the post-LIBOR JPY rate complex. The pricing / discounting mechanics live in [[derivatives/ois-tona-curve|the OIS TONA curve]] entry; this page covers the benchmark-governance and market-structure story. ## The Reform Bodies The following table is scoped to public primary sources (boj.or.jp, fsa.go.jp). It restates licence / structure / product boundaries from those materials and does not invent market share, ranking, or unstated numerical claims. ^[source:boj.or.jp; fsa.go.jp] | Body | Role | |---|---| | Study Group on Risk-Free Reference Rates | Identified the **uncollateralized overnight call rate (TONA)** as the JPY risk-free reference rate in its December 2016 report. | | Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks | Established August 2018; the main public-private forum that ran the JPY LIBOR transition, developed the OIS market, and published transition guidance through many plenary meetings. | | Bank of Japan | Convenes the committee secretariat, calculates and publishes TONA, and supervises money-market functioning. | | [[financial-regulators/fsa|Financial Services Agency (FSA)]] | Supervisory authority for the transition and for benchmark administrators. | | [[financial-regulators/zenginkyo|Japanese Bankers Association]] / JBATA | Administers the reformed TIBOR (the surviving term benchmark). | The committee structure is why "benchmark reform" in Japan was a coordinated public-private effort rather than a single regulator's decree. ## Why TONA Sits on the Call Market TONA is not a survey rate; it is the volume-weighted average of real uncollateralized overnight call transactions reported by tanshi companies to the BoJ. That design choice is the heart of the reform: - **Transaction-based robustness**: anchoring the benchmark to actual trades (the market in [[money-market/call-market-structure|the uncollateralized call segment]]) removes the submission-based manipulation vulnerability that ended LIBOR. - **Overnight, near risk-free**: because it is an overnight rate close to the policy target, it strips out most bank-credit and term-premium content, making it a clean discounting / RFR building block. - **Policy linkage**: TONA tracks the BoJ operating guideline closely, so it transmits [[money-market/boj-open-market-operations|BoJ operations]] into the benchmark complex day by day. The trade-off is that an ample-reserves policy environment can thin out call-market activity, which keeps TONA volume a thing to watch. ## Transition Timeline The following table is scoped to public primary sources (boj.or.jp, fsa.go.jp). It restates licence / structure / product boundaries from those materials and does not invent market share, ranking, or unstated numerical claims. ^[source:boj.or.jp; fsa.go.jp] | Period | Event | |---|---| | 2016 | Study Group identifies TONA as the JPY risk-free rate (December report). | | 2018 | Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks established (August); OIS-market development work begins. | | 2018–2021 | New JPY swap / loan business migrates to TONA reference; legacy JPY LIBOR contracts amended or covered by ISDA fallback protocol. | | End-2021 | Representative JPY LIBOR ceases. A non-representative synthetic JPY LIBOR is introduced as a temporary wind-down bridge for some legacy tenors. | | End-2023 | Synthetic JPY LIBOR ceases; remaining JPY rate products reference TONA, with TIBOR retained for term-fixing needs. | | End-2024 | Euroyen TIBOR (Z-TIBOR) permanently ceases (final fixing 30 December 2024); Japanese Yen TIBOR continues. | ## The Resulting Multi-Rate World Japan intentionally did not collapse everything into a single rate. The surviving structure is: | Benchmark | Nature | Primary use | |---|---|---| | [[derivatives/ois-tona-curve|TONA]] | Overnight, transaction-based, near risk-free. | OIS, discounting, RFR-linked loans / FRNs compounded in arrears. | | [[money-market/japan-tibor-benchmark-rate|Japanese Yen TIBOR]] | Term, quote-based, credit-sensitive. | Term loans and some bonds needing a forward-looking term fix. | This contrasts with currencies that moved almost entirely to an RFR. Keeping a reformed term benchmark alongside the RFR reflects demand from JPY loan markets for a known term rate set at the start of each interest period. The price difference between the two — the TIBOR-vs-TONA basis — is a market-watched credit / term-premium signal rather than an anomaly. ## How Legacy Contracts Were Handled - **Derivatives**: covered by the ISDA 2020 IBOR Fallbacks Protocol; transitioned JPY LIBOR trades reference TONA compounded in arrears plus a fixed credit-adjustment spread. See [[derivatives/isda-2020-protocol-japan-implementation|ISDA 2020 protocol Japan implementation]]. - **Cash products (loans / bonds)**: handled through contractual fallbacks, amendments, or active conversion to TONA or TIBOR references, with spread adjustments where needed. - **Euroyen TIBOR users**: directed to fallback arrangements ahead of the 2024 cessation. ## Reading Checklist 1. Separate the **benchmark-governance** story (this page) from the **pricing / discounting** story ([[derivatives/ois-tona-curve|OIS TONA curve]]). 2. Remember TONA is transaction-based on the uncollateralized call market; TIBOR is quote-based and term. 3. JPY LIBOR is gone (representative end-2021, synthetic end-2023) — do not treat it as live. 4. The surviving JPY benchmarks are TONA and Japanese Yen TIBOR; Euroyen TIBOR ended at end-2024. 5. Treat the TIBOR-vs-TONA spread as a credit / term signal. ## JapanFG Relevance - [[financial-regulators/boj-monetary-policy|BoJ monetary policy]] / the Bank of Japan calculates TONA and convenes the reform committee. - [[financial-regulators/fsa|FSA]] supervises the transition and benchmark administrators. - [[financial-regulators/zenginkyo|Japanese Bankers Association]] (via JBATA) administers the surviving TIBOR. - [[megabanks/mufg]], [[megabanks/smfg]], and [[megabanks/mizuho-fg]] transitioned large loan and derivative books across the reform. - [[securities-firms/mizuho-securities]] and [[securities-firms/mufg-mums]] are active in the TONA-OIS market that the reform helped build. ## Boundary Cases - **Benchmark reform vs monetary policy**: reform is about which reference rates exist and how they are governed, not about the level of the policy rate. - **RFR vs term rate**: TONA is the RFR; TIBOR is the term benchmark; both survive by design. - **Synthetic LIBOR vs representative LIBOR**: synthetic JPY LIBOR was a temporary non-representative bridge, not a continuation of real LIBOR. - **Cessation vs reform**: JPY LIBOR was ceased; TIBOR was reformed and retained — different outcomes for different benchmarks. ## Related - [[money-market/INDEX|money-market INDEX]] - [[money-market/japan-money-market]] - [[money-market/call-market-structure]] - [[money-market/japan-tibor-benchmark-rate]] - [[money-market/boj-open-market-operations]] - [[derivatives/ois-tona-curve]] - [[derivatives/japan-irs-market]] - [[derivatives/isda-2020-protocol-japan-implementation]] - [[derivatives/japan-interest-rate-derivatives-overview]] - [[financial-regulators/boj-monetary-policy]] - [[financial-regulators/fsa]] - [[financial-regulators/zenginkyo]] - [[megabanks/mufg]] - [[megabanks/smfg]] - [[megabanks/mizuho-fg]] - [[INDEX|FinWiki index]] ## Sources - Bank of Japan: Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks surface. - Bank of Japan: Study Group "Report on the Identification of a Japanese Yen Risk-Free Rate" (December 2016). - Bank of Japan: Interest Rate Benchmark Reform (preparedness for the discontinuation of LIBOR). - Bank of Japan: Call Money Market Data (TONA publication). - Financial Services Agency: publication on the end of Euroyen TIBOR.