Reuters reports that as part of a policy review in March, the BOJ created a scheme that seeks to mitigate the side-effects of negative rates in the hope of convincing markets the central bank will cut rates if necessary to support the economy.

But the head of Japan's regional bank lobby on Wednesday urged the central bank to be cautious about deepening negative interest rates due to the "very big" impact it would have on lenders' earnings.

"Even after the creation of this new scheme, I hope the BOJ takes a cautious stance about deepening negative rates," Hisashi Shibata, head of the lobby, said.