What Is TONAR?

TONAR — the Tokyo Overnight Average Rate, also written as TONA — is the benchmark interest rate for Japanese yen (JPY) lending and derivatives markets. It measures the volume-weighted average rate of unsecured, uncollateralized overnight call transactions between banks and other financial institutions in Tokyo's money market, and it is administered and published by the Bank of Japan.

Like SOFR in the US, SONIA in the UK, and the euro short-term rate (€STR) in the eurozone, TONAR is a "risk-free rate" (RFR): it is calculated directly from real transaction data rather than the panel-bank estimates that underpinned LIBOR, which makes it far harder to manipulate.

The market TONAR measures is not new — Japan's uncollateralized overnight call market dates back to July 1985. What changed was TONAR's role: following consultations that began in 2015, the Bank of Japan's Study Group on Risk-Free Reference Rates formally identified TONAR as Japan's alternative reference rate on 28 December 2016, ahead of the global move away from LIBOR.

How Is TONAR Calculated?

The Bank of Japan calculates TONAR each Tokyo business day from actual money-market activity:

Data collection — The Bank gathers data on unsecured overnight call transactions among financial institutions, trade date to next-business-day maturity.
Calculation — TONAR is computed as the volume-weighted average rate of all qualifying transactions settled that day.
Publication — The rate is published the following business day, similar to SOFR and SONIA's next-day publication schedule.

Because it draws on a broad, active segment of yen money markets rather than estimated quotes, TONAR is designed to reflect genuine overnight funding costs for JPY. The Bank of Japan's own Time-Series Data Search system (database FM01, series STRDCLUCON) carries daily uncollateralized overnight call rate data back to January 1998, giving the market a long, transparent history to work from.

TONAR vs Yen LIBOR

Feature	TONAR	Yen LIBOR
Basis	Unsecured overnight interbank call transactions	Unsecured, panel-bank estimated
Source	Actual transaction data	Expert judgment / estimated quotes
Term structure	Overnight only; TORF provides a separate forward-looking term rate	Built-in (1M, 3M, 6M, 12M)
Day count	Actual/365 (fixed)	Actual/360
Availability	Published the next business day	Set at the start of the interest period
Credit component	None (risk-free)	Embedded bank credit risk

Japanese yen LIBOR ceased publication at the end of 2021 (synthetic yen LIBOR followed at the end of 2022), and the Bank of Japan's Cross-Industry Committee on Japanese Yen Interest Rate Benchmarks recommended TONAR — used either as a compounded-in-arrears overnight rate or via the forward-looking TORF term rate — as the preferred replacement. Notably, Japan took a different path from the UK and US on legacy rates: yen TIBOR was not fully retired and continues to be published for now, even as TONAR has become the dominant reference for new yen derivatives and loans.

TONAR vs SOFR, SONIA and €STR

All four benchmarks are overnight, transaction-based risk-free rates, but they differ in currency, structure, and convention:

Feature	TONAR (JPY)	SOFR (USD)	SONIA (GBP)	€STR (EUR)
Administrator	Bank of Japan	Federal Reserve Bank of New York	Bank of England	European Central Bank
Basis	Unsecured overnight call	Secured (Treasury repo collateral)	Unsecured overnight interbank	Unsecured overnight interbank
Day count	Actual/365	Actual/360	Actual/365	Actual/360
Forward-looking term rate	TORF (Tokyo Term Risk Free Rate)	Term SOFR	None widely used	None widely used
Data available from	1998-01-05	2018-04-03	2018-04-23 (reformed methodology)	2019-10-02

The practical takeaway for treasury teams juggling multi-currency facilities: JPY and GBP both use an Actual/365 day count, while USD and EUR use Actual/360 — so the same nominal rate doesn't translate directly across currencies. See our guides to SOFR, SONIA, and €STR for the other three sides of that comparison.

How TONAR Is Used in Loans

Yen loan and derivative markets settled on two main conventions for referencing TONAR, mirroring the broader RFR transition playbook:

Compounded TONAR in arrears: Daily TONAR rates compound over the interest period using an Actual/365 fixed day count, so total interest is only known close to the end of the period — the same approach used for compounded SOFR and SONIA. Most JPY interest rate swaps now trade on this compounded-daily-TONAR basis.
TORF (Tokyo Term Risk Free Rate): For borrowers who want a rate fixed at the start of the interest period rather than known only in arrears, QUICK Benchmarks Inc. (QBS) — a Financial Services Agency-designated Specified Financial Benchmark Administrator — publishes TORF, a forward-looking term rate derived from JPY overnight index swaps referencing TONAR. TORF has been published since April 2021 and plays a role for yen borrowers similar to Term SOFR's role in USD markets.

Whichever convention applies, the mechanics are the same as for any compounded-in-arrears RFR: each day's day count convention and compounding-in-arrears treatment determines how daily fixings turn into a single period interest charge.

Where TONAR Stands Today

The Bank of Japan has been on a gradual but sustained tightening path. After ending decades of near-zero and negative rates, the BOJ raised its policy rate — the target for the uncollateralized overnight call rate — to around 0.25% in July 2024, then to 0.5% in January 2025, to 0.75% in December 2025, and most recently to around 1.0% at its 16 June 2026 meeting, a 7–1 Board vote that also lifted the complementary deposit facility rate to 1.0% and the basic loan rate to 1.25%. TONAR itself last printed at 0.978% on 8 July 2026, trading — as expected for a risk-free overnight rate — just below that ~1.0% policy target.

The Bank's next policy decision concludes on 31 July 2026, with money markets pricing a high probability that the BOJ holds steady after four consecutive hikes, though the Board has signaled it intends to keep raising rates gradually as it assesses domestic price pressures.

Key Dates

July 1985 — Japan's uncollateralized overnight call market, the market TONAR measures, begins operating
2015 — Bank of Japan study group begins consultations on a JPY risk-free reference rate
28 December 2016 — Bank of Japan formally identifies TONAR as Japan's alternative reference rate
April 2021 — TORF (Tokyo Term Risk Free Rate) production rates begin publication
31 December 2021 — Yen LIBOR panels cease (synthetic yen LIBOR follows at end of 2022)

Frequently Asked Questions

What does TONAR stand for? TONAR stands for the Tokyo Overnight Average Rate — also referred to as TONA — the JPY benchmark interest rate administered by the Bank of Japan.

What is today's TONAR rate? See our current & historical rates page for the latest published rate data across all four benchmarks, or use our RFR Loan Calculator to run a loan calculation with up-to-date rate data straight from the Bank of Japan.

Is TONAR the same as TONA? Yes — TONA and TONAR refer to the same Bank of Japan-administered benchmark; both abbreviations are used interchangeably across market documentation and data vendors.

Did TONAR replace yen LIBOR? Yes, for new transactions. Yen LIBOR panels ceased publication at the end of 2021, and the Bank of Japan's Cross-Industry Committee recommended TONAR (compounded in arrears, or via the TORF term rate) as the replacement — though unlike GBP and USD LIBOR, yen TIBOR has continued alongside TONAR rather than being fully retired.

What is the difference between TONAR and Term SOFR? Both are forward-looking-style solutions for their respective currencies, but TORF (the yen term rate) is administered by QUICK Benchmarks Inc. and derived from JPY overnight index swaps, while Term SOFR is administered by CME Group and derived from SOFR futures. See our guide to SOFR for the USD side, and our roundup of how all four benchmarks are moving together for the current cross-currency picture.

Calculate Your TONAR Loan

Use our free RFR Loan Calculator to calculate interest on any TONAR-based loan — compounded in arrears with an Actual/365 day count — with a full daily rate ledger and Excel export.