Prime Minister Shinzo Abe's ruling party called for a "cautious response" to an invitation to join the China-led Asian Infrastructure Investment Bank, but will leave the decision to him, a draft report said.
A panel of ruling Liberal Democratic Party lawmakers was tasked with looking into Japan's possible membership in the AIIB, ahead of a meeting of Japanese and Chinese finance officials in Beijing this weekend.
The report, viewed Wednesday, was to be submitted to Abe on Thursday.
Japan and the United States have stayed out of the Beijing-based institution, seen as a rival to the U.S.-dominated World Bank and Japan-led Asian Development Bank, citing concerns about transparency and governance.
Tokyo looks unlikely to make a decision on joining any time soon.
The LDP's draft at first called on Tokyo to deal with the AIIB as "appropriate," but officials in charge said they would change the word to "carefully," reflecting the opinions of an overwhelming majority of lawmakers.
"Our conclusion is that it was a right decision not to become a founding member. The government should closely monitor the situation and deal with it carefully," said Kenya Akiba, a member of the LDP panel that drew up the draft report.
"What's in it for us to make our stance clear now? We are taking the long view and will make judgment only when issues such as governance, debt sustainability and establishment of a permanent board are resolved."
Tokyo and Washington were caught off guard when a total of 57 countries — including Group of Seven members Britain, Germany and France — joined the Beijing-sponsored $100 billion lender as its prospective founding members by the end of March.
AIIB said last month it expected to be operational by the end of the year.