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Bank of Japan Deputy Governor Hirohide Yamaguchi defended the central bank’s self-imposed limit on bond purchases after a lawmaker suggested it could buy more debt to fight deflation.

“This isn’t just something we uphold to keep our backyard tidy,” Yamaguchi told parliament in Tokyo today. “Should people mistakenly start to think we are financing government debt, that could create turbulence in financial markets.”

The central bank currently keeps its total government bond purchases below the amount of banknotes in circulation. Yamaguchi was responding to a question from ruling Democratic Party of Japan lawmaker Motohisa Ikeda, who asked whether abandoning that rule would enhance the bank’s policy tools to defeat falling prices.

Finance Minister Naoto Kan has been calling on the central bank to do more to fight deflation, pressure Governor Masaaki Shirakawa has responded to by saying there’s no “magic” solution for stamping out falling prices. The central bank currently purchases 1.8 trillion yen ($20 billion) of government bonds each month, an amount that Shirakawa said cannot be increased much more.

We have the rule “because it’s important we make our intentions clear to ensure market stability,” Yamaguchi said.

The government has called on the central bank to take action because the scope of further fiscal stimulus has been limited by a swelling debt load. Standard and Poor’s last month lowered its outlook for the nation’s AA sovereign debt rating, citing Prime Minister Yukio Hatoyama’s failure to come up with policies to contain the largest debt burden in the industrialized world.

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