Fed lifts cap on currency swap with Bank of Japan

WASHINGTON, Oct 14 (Reuters) - The U.S. Federal Reserve on Tuesday erased the upper limit on its currency swap line with the Bank of Japan, the latest in an extensive series of steps to restore stability in shaky credit markets world-wide.

"The size of the swap line between the Federal Reserve and the Bank of Japan will be increased to accommodate whatever quantity of U.S. dollar funding is demanded," the Fed said in a statement.

The Fed has opened swap lines with other major central banks to enable them to lend to their local commercial banks in an effort to get U.S. dollars circulating in overnight and short-term money markets.

The Fed on Monday similarly removed the caps on swap lines with the Bank of England, the European Central Bank and the Swiss National Bank. (Reporting by Mark Felsenthal; Editing by Tom Hals)