Prime Minister Ryutaro Hashimoto on Tuesday approved an outline for a U.S.-style "bridge bank" designed to prevent bank failures from disrupting the entire economy.
Funds from the government-backed Deposit Insurance Corp. should be used to set up such bridge banks, which would extend loans to sound borrowers of failed banks, Hashimoto decided while meeting with ruling Liberal Democratic Party and government officials.
Hashimoto issued the instruction to the LDP, whose task force on the bad loan problem aims to draft a plan by Thursday for creating the special state-controlled banks.