On the first working day after being ravaged by earthquake and tsunami on Friday, Bank of Japan moved swiftly to calm the financial markets.
The apex bank has widened its asset purchase programme which along with extending funds worth about 10 trillion yen for daily bank operations, is worth about 15 trillion yen.
"This morning, the bank conducted a same-day funds supplying operation totalling 7 trillion yen, which was the largest amount ever conducted, and a future-day-start funds supplying operation totalling 3 trillion yen," Bank of Japan (BoJ) said in a statement.
Separately, the central bank said it would increase the amount for the existing Asset Purchase Programme by about 5 trillion yen.
Despite the monetary easing moves, investors went into panic selling that saw the domestic stock market tumble over six per cent, one of the biggest losses in recent times. Benchmark Nikkei 225 dropped 6.18 per cent to 9,620.49 points.
On Friday, the index had declined 1.72 per cent to 10,254.40 points. In the worst calamity since the World War II, a strong earthquake followed by massive tsunami hit Japan on Friday.
Apart from taking a severe toll on lives and properties, the disaster has also sparked concerns of radioactivity, since many nuclear plants have been badly damaged.
Striking a cautious note, the central bank said damage due to the earthquake has been geographically widespread.
"... for the time being, production is likely to decline and there is also concern that the sentiment of firms and households might deteriorate," it added.
BoJ asserted it would do its utmost to ensure stability in the financial markets as well as providing liquidity.
Japan, which is now the world's third largest economy, is also bogged down by debt and falling exports.