In an effort to maintain stability in the financial system, the Bank of Japan on Monday provided financial institutions with 1 trillion yen via purchases of discount bills.

The move follows Saturday's announcement of a massive bailout package for Resona Bank, BOJ officials said.

This marks the first such step for the central bank since late March, when the U.S.-led war on Iraq was launched.

The maneuver was expected to push the outstanding balance of current accounts held by private financial institutions at the central bank above the upper limit of 27 trillion yen, set by the central bank.

The BOJ apparently expects the move to curb disruption within the nation's financial sector.

The central bank is closely monitoring depositors' moves at Resona group outlets nationwide, sources at the BOJ said.

It is also preparing special collateral-free loans for Resona Bank at any time deemed necessary, they said.

The central bank convened a two-day meeting of its nine-member Policy Board on Monday afternoon.

The board was expected to assess the latest developments -- including the Resona bailout plan -- and their potential effects on the financial market. They were also expected to discuss the necessity of taking further action to slacken the BOJ's monetary grip.

The sources said cash flow at the Resona group firms is stable and that it is difficult to imagine these firms will have problems in their daily operations.

There was no alarm or confusion among Resona depositors Monday, with the government having already made it clear that the deposits are fully guaranteed, they said.

In the Tokyo money market, financial institutions were seen shunning morning trade. Following the BOJ's announcement that it had injected the financial system with funds, however, interest rates remained stable.

On the Tokyo Stock Exchange, stocks fell under renewed selling pressure, with the benchmark Nikkei index dropping below the psychologically important 8,000 mark in the morning. The Nikkei closed at 8,039.13.