The government's top spokesman expressed support Friday for continuing to fully guarantee bank deposits held by local governments after the planned abolishment the 100 percent guarantee system.
"We have seriously considered the problems faced by local governments and found that (protective measures) should be implemented if possible," Chief Cabinet Secretary Yasuo Fukuda said.
Japan's 3,200 local governments held a combined 19.87 trillion yen in deposits at banks as of Sept. 30.
Taro Aso, chairman of the ruling Liberal Democratic Party's Policy Research Council, and economists have warned that if local governments start moving savings to stronger banks, it would bankrupt many regional banks and called for a postponement of the imposition of the refund limit.