The government may lower the premiums banks pay to insure customer deposits and raise government guarantees on the money, financial services minister Shizuka Kamei said Friday.

The move follows Prime Minister Yukio Hatoyama's endorsement of a plan to double the savings account ceiling at state-run Japan Post Bank Co. to ¥20 million, which raised concerns that depositors may opt for the security of a state-backed bank and pull money out of commercial banks. Deposit coverage is now limited to ¥10 million per customer.

"If depositors at the mid-to-smaller financial institutions are going to be worried about their guarantees, we may well make some changes to the current cap," said Kamei, who doubles as postal reform minister.

Kamei last month revived a plan to change the course of the privatization process of Japan Post, owner of the world's biggest bank by deposits. The government will keep more than a third of the holding company, which holds the bank and insurer, as well as the postal service.

Kamei's postal reform plan has drawn fire from private-sector financial institutions as well as his political foes.

The United States and the European Union have also joined the chorus, sending a joint letter to the government calling for fair competition among market players, Chief Cabinet Secretary Hirofumi Hirano said Friday.

In the letter, U.S. Ambassador to Japan John Roos and Hugh Richardson, ambassador and head of the delegation of the European Commission in Japan, are believed to have claimed Tokyo's plan on raising the deposit ceiling at the postal bank may breach World Trade Organization accords.

Hirano declined comment on the letter.