The Bank of Japan is reviewing its investment rules after links were found between the bank's governor and a fund manager arrested for insider trading.
Toshihiko Fukui shows no signs of resigning
The bank's governor, Toshihiko Fukui, saw his investments in a fund run by Yoshiaki Murakami double in seven years to 22m yen ($190,000; £100,000).
Mr Murakami was arrested for alleged violations of Japan's securities laws.
Mr Fukui, who has been urged to resign, has said he would give away any profits made from the fund to charity.
"I am very, very sorry. I deeply apologise to the people. The Bank of Japan's compliance have been widely criticised. This must be taken seriously," Mr Fukui said.
Fund manager Mr Murakami said earlier this month that he unwittingly broke insider trading laws in connection with a takeover initiated by internet firm Livedoor in 2005.
The bank has established a committee with legal experts and individuals from outside the bank to assess compliance rules, Mr Fukui said on Tuesday.
Mr Fukui has admitted to investing $87,000 in 1999 in the fund run by Yoshiaki Murakami, before he became the bank's governor.
Questions have been raised about the ethics of holding onto the investment while he held such a prominent public position.
Mr Fukui is set to reappear before a parliamentary committee to give more details about his investments on Thursday.
The final profits made by Mr Fukui will not be known until later in June.
As well as surrendering any profits made from the fund, Mr Fukai said he would take a pay cut for six months.
Opposition politicians have said Mr Fukui was careless in his judgement.
However, Prime Minister Junichiro Koizumi has backed Mr Fukui, who wants to see out his term which ends in March 2008.
The case comes as the bank appears close to ending its policy of zero interest rates that has lasted for five years.
Indications that the bank could raise rates sooner rather than later have alarmed some analysts who fear it could dampen the nation's economic recovery.
Recent weeks have seen volatility in global markets, including Japan's Nikkei share index which closed 211.94 points lower at 14,648.41 on Tuesday.