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TOKYO - JAPANESE Prime Minister Taro Aso on Monday announced new measures to support the ailing stock market including boosting a government fund to pump capital into banks if needed.
Mr Aso said that Japan would also tighten restrictions on short-selling - selling shares in order to profit from an anticipated fall in prices.
He also said he ordered an increase in the government's ceiling for recapitalisation of ailing banks under the fresh economic package, but did not specify the amount of the new fund.
Shortly after he spoke, finance ministers and central bank chiefs of the Group of Seven economic powers issued a joint statement saying they would cooperate for market stability.
'It is still unpredictable how the market would react' to the new G7 statement, Mr Aso told reporters.
'But the government must implement measures because (the crisis) will have a critical impact on share prices, the market and the real economy,' he said.
The Group of Seven also warned against 'excessive volatility' in the yen.
The Japanese currency, often seen as a safe haven, soared to a 13-year high on Friday against the dollar due to the global financial turmoil.
The strong yen hurts exporter earnings, contributing to the plunge on the market.
Mr Kaoru Yosano, the economic and fiscal policy minister, said Sunday that Japan would increase from two to 10 trillion yen (S$165.8 billion) the amount of money the government can inject into ailing banks.
But Finance Minister Shoichi Nakagawa said on Monday that no figure had been set.
Japanese banks have weathered the credit crisis better than their Western counterparts.
They have been conservative lenders since recovering several years ago from their own crisis of non-performing loans.
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