REUTERS - Japan's central bank said on Friday it will set up a Singapore dollar lending line for Japanese companies operating in the country, a move aimed at facilitating direct investment to Asia.
The Bank of Japan (BOJ) and Monetary Authority of Singapore (MAS) agreed to the scheme on Friday, and they hope to begin lending in the autumn.
Under the arrangement, Japanese banks operating in Singapore can receive Singapore dollars from MAS by putting up Japanese government bonds as collateral at an account the MAS holds at the BOJ.
It is the BOJ's second such scheme in Asia, following one with Thailand set up in 2011 to assist Japanese banks and firms operating in the country when it was hit by a severe flood.
The funding line with Singapore reflects an increase in the number of Japanese companies and banks operating in the country.
Japanese direct investment to Singapore rose 56 percent in five years to 3.1 trillion yen (S$39.2 billion) as of the end of 2012.