The Financial Services Agency drafted a bill Wednesday to limit banks' shareholdings to the net worth of their capital.
The bill, designed to make the financial system less vulnerable to stock market fluctuations, was approved by the ruling Liberal Democratic Party the same day. It also calls for the establishment of a stock-buying entity in January to absorb cross-held shares unloaded by banks.
The FSA plans to submit the bill to an extraordinary Diet session set to convene Sept. 27.