Japan central bank ups dollar credits for banks

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TOKYO (AP) -- Japan's central bank said Tuesday it had expanded the scope of its agreement with the U.S. Federal Reserve, allowing it to provide more cash to financial institutions to keep money markets operating smoothly.

The Bank of Japan said it had revised a dollar-yen swap agreement with the Federal Reserve and will now offer an unlimited amount of dollars to banks and other financial institutions operating in Japan. The previous limit was US$120 billion.


The BOJ also left its main short-term interest rate unchanged at 0.5 percent.

The announcement brings Japan's central bank in line with its global peers. On Monday, the European Central Bank, the Bank of England, the U.S. Federal Reserve and the Swiss National Bank jointly announced they would also provide unlimited short-term dollar funding.

The moves are part of an effort by the global central banks to keep cash flowing in money markets by providing a steady source of dollars.

The BOJ had said previously it was considering the move. It also revised margin and interest rates, all "with the aim of ensuring stability in financial markets," according to a statement.

Japan's central bank made the announcement after an emergency meeting Tuesday night.

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