The Bank of Japan on Wednesday said it would force-feed the economy with money as needed, in a bid to wipe out even hints of a collapse in the financial system.

The BOJ Policy Board said it will aim at maintaining a 22 trillion yen to 27 trillion yen balance in the accounts private financial institutions hold at the central bank.

That's a rise from the official target of 17 trillion yen to 22 trillion yen, but means little real change, since the banks' current account balance at the BOJ is already above 26 trillion yen. The central bank's monetary policy currently has a clause allowing it to ignore the upper limit, if deemed necessary.

"The decision's effects will be invisible," said Mamoru Yamazaki, chief economist at Barclays Capital. "But someone has to say, 'We're here, and we will step in to prevent credit collapse, if stock prices fall too far.' "

Economic leaders have publicly complained about the lack of official measures to contain fears over the market. Prime Minister Junichiro Koizumi is currently on a diplomatic tour of Europe, and Chief Cabinet Secretary Yasuo Fukuda was conspicuously absent when stock prices hit yet another post-bubble low Monday.

BOJ Gov. Toshihiko Fukui said short-term money markets are calm.

"Although we have no reason to fear funding problems to any one specific bank, we want to act pre-emptively to address any possible doubts," he said. "We are not happy-go-lucky. We believe the banking system is extremely fragile."

Banks' massive stockholdings leave them extremely vulnerable to stock price falls.

"It's a message to banks to hurry up, clean up their act and win market trust," said Hideo Kumano, senior economist at Dai-ichi Life Research Institute. "The BOJ is extremely worried about how stock price falls will affect the banks."

Bankers have been left on the defensive.

Mitsuru Machida, managing director of Mizuho Financial Group, on Monday told reporters there was no fear of funding shortages at his bank.

"Deposit levels have fallen, but our loan assets have fallen even more, especially among corporate clients," Machida said. "We have more cash at hand, and we're actually looking for short-term investments."

The BOJ also said it would accept as collateral state-backed loans on deeds to the Industrial Revitalization Corp., once such loans are issued. The IRC was set up earlier this month to revive ailing companies that continue to weigh down banks and prevent them from lending to higher-risk companies.

"These loans are government-backed, and make extremely safe collateral assets," Fukui said. "Plus, it will help toward resolving the bad-loan problem."

The BOJ has been providing banks with virtually free money that is supposed to reach companies in the form of loans; instead its being funneled into zero-risk, low-yield investments, such as government bonds.

Economists' consensus is that two years of such measures have done little to turn the economy around, while the BOJ maintains its policies have prevented a crisis in the banking system.