Japan pledged yesterday "to take all possible measures" to support its financial system as it prepared for an emergency meeting in Tokyo today of the Group of Seven leading industrial countries to discuss the country's economic crisis.

Japan is expected to come under heavy pressure to close down ailing banks as a first step towards restoring confidence in its financial system.

Mr Hikaru Matsunaga, finance minister, last night reconfirmed the government's commitment to support the interbank market and protect depositors.

"The ministry is determined to continue to take all possible measures to stabilise the financial system," he said.

Meeting Japanese officials and policymakers ahead of the talks, Mr Larry Summers, US Deputy Treasury Secretary, stressed the importance of moving quickly to deal with the banks' bad loans and revive the economy. He told the officials it was vital for Tokyo to address the issues within weeks if it is to retain the benefits from last week's heavy foreign exchange market intervention. Mr Matsunaga's comments came as shares of the Long Term Credit Bank fell through the 100 yen level amid fresh fears for its survival. Its shares and those of Nippon Credit Bank, which is seeking to restructure loans from insurance companies, were suspended after a published report, denied by all sides, that the finance ministry was planning to force them to merge.

Mr Kiichi Miyazawa, a former prime minister, said Mr Summers told him Japan should cut taxes and abandon the "convoy system" whereby good banks are expected to support bad ones, weakening the sector as a whole.