By Chris Isidore, senior writer, and Aaron Smith, staff writer
March 14, 2011: 11:58 AM ET
NEW YORK (CNNMoney) -- Japanese officials said Monday they will backstop the country's financial system with a cash injection of more than $180 billion to buffer it against the impact of last week's devastating earthquake and tsunami.
The Bank of Japan doubled the size of its existing asset-purchase program to ¥10 trillion from ¥5 trillion. In addition it pumped an additional ¥10 trillion into the economy through a record "funds-supplying" operation, bringing the total new cash to ¥15 trillion, or about $183 billion.
Japanese officials said that the increase in asset purchases is for "preempting a deterioration in business sentiment and an increase in risk aversion in financial markets from adversely affecting economic activity."
The central bank is purchasing a mix of assets, including Japanese government bonds, Treasury discount bills and corporate bonds.
"The Bank will do its utmost to continue ensuring stability in the financial markets and securing smooth settlement of funds, including providing liquidity," said the bank, in a press release.
The aim is to make sure the banks have enough cash on hand to meet demands of panicky investors and cover withdrawal demands of bank customers.
Officials will rigidly monitor the markets to prevent any transactions by people trying take advantage of the disaster, Japanese Minister for Financial Services Shozaburo Jimi said Sunday. Specifically, the ministry will ban so-called naked short selling, which can cause a run on stocks.
The earthquake hit off the coast of Japan, several hundred miles from Tokyo, just before the close of trading in Japanese markets on Friday afternoon. The benchmark Nikkei 225 stock index closed down 6% on Monday.
Friday's earthquake -- the most powerful to hit Japan in at least 100 years -- unleashed walls of water that caused widespread damage. By official counts, 1,833 people have died and thousands are missing. Fears remain that the toll could go much higher.
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