TOKYO, JAPAN - THE Japanese government is asking the Bank of Japan to buy commercial paper from companies to ease tight corporate funding, the Nikkei newspaper said on Sunday.

The government announced on Friday its own scheme of buying up to 3 trillion yen (S$49.2 billion) in commercial paper from companies through a state-backed lending institutions as part of Prime Minister Taro Aso's economic stimulus package.

Without citing any sources, the Nikkei said the government is urging the Bank of Japan to adopt a similar scheme to ease credit market strains, although it is uncertain whether the request will materialise soon as the central bank is hesitant of directly buying such risk assets.

Instead of buying commercial paper directly from companies, the Bank of Japan could opt to buy those held by financial institutions as it fits well with the central bank's policy goal of maintaining financial system stability, the Nikkei reported.

A seized-up commercial paper market has forced many Japanese companies to boost borrowing from banks at a record pace as they set aside cash at the year-end, when demand for funds tightens.

The Bank of Japan already accepts commercial paper as collateral in its fund operations but has been hesitant to directly purchase them.

The bank's next policy-setting meeting will be held on Dec 18-19.