Perhaps the reason why the BOJ has not been more forceful in its arguments is that at the heart of the debate is a delicate matter of investors’ trust in the government’s ability to raise money and its commitment to fiscal reforms.

Gov. Masaaki Shirakawa and other senior officials have been talking about a potential for instability in the bond market, loss of market confidence in the Japanese currency and long-term inflation risks.

But those arguments may sound hollow to Japanese politicians who face more than 10 trillion yen ($131 billion) in post-quake rebuilding costs and fear tax hikes could alienate voters.

Getting the central bank to foot the bill, or effectively print money by underwriting reconstruction bonds, may be just too tempting.

For many lawmakers and some economists it means killing two birds with one stone — securing cheap funds at no political cost and giving the recovering economy an extra shot in the arm with a sizeable cash injection.

The BoJ buys 21.6 trillion yen worth of bonds in the market every year and has bought further 3.8 trillion yen in short-term debt under its 15 trillion asset buying program.

But like most other developed economies Japan forbids the central bank from directly financing government spending as a safeguard of its independence.

Advocates of bond underwriting say, however, the triple blow of a massive earthquake, a deadly tsunami and a grave nuclear crisis qualifies as “exceptional circumstances” under which such direct debt purchases are allowed.

They also ridicule the BoJ’s concern that printing money and excessive supply of liquidity can breed high inflation in the future at a time when the economy remains mired in deflation.

But speaking to BOJ officials one gets a clear sense that their concern is less about inflation but more about setting a dangerous precedent of acting under pressure from politicians.

“History shows that what started as a temporary step turned out to be not temporary,” Masato Shizume, a senior economist at the BoJ’s Institute for Monetary and Economic Studies said.

“Once the BoJ starts underwriting bonds, it easily gets out of control,” Shizume said.

That lesson in question is the period in the 1930s, when the government was selling bonds worth 3 to 5 percent of gross national product per year directly to the BoJ to spend its way out of depression. Inflation stayed subdued below 2 percent as long as the central bank kept reselling the bonds to the market.

But once it stopped doing that and debt underwriting tripled in 1937 on military spending, inflation soared to 12 percent.

BoJ critics say things are simply different than eight decades ago and inflation is just not an issue now.

“I think the only one in Japan worrying about hyper inflation now is the BOJ,” said Kikuo Iwata, professor at Gakushuin University.

The BoJ acknowledges that unlike in the postwar period Japan does not suffer a shortage of goods and is mired in deflation, meaning little risk of a sudden inflation flare-up.

The biggest worry, however, is that by underwriting government bonds at a time when there are no visible strains in the debt market could make investors question their assumptions about the government’s access to financing.

Bond investors are prepared to buy government debt as long as they have the confidence that the government will have no difficulty raising funds in the future to pay off existing debt.

If that were to change, the pricing of Japanese bonds and the whole risk profile could shift, central bankers argue.

“If markets see the central bank as conducting monetary policy with the aim of debt financing, long-term interest rates will rise and hurt Japan’s economy,” Shirakawa said last month.

The central bank is also concerned that by effectively giving the government access to printing presses it would weaken its resolve to improve state finances by cutting spending and deficits and raising revenues, for example by lifting taxes.

The government has said it wants to at least double the 5 percent sales tax and possibly raise other taxes to fund swelling social security costs and pay for reconstruction.

But there is strong resistance to tax increases both within the ruling party and the opposition.

In fact, while Finance Minister Yoshihiko Noda who is seen as front runner in the race to replace unpopular Prime Minister Naoto Kan is an advocate of tax increases, most of his potential rivals are cool about raising taxes.

Those economists who side with the BoJ warn underwriting bonds means taking unnecessary risks.

“The BoJ has sailed in uncharted territory for the past decade. Some of its measures went well, others didn’t,” says Shinichi Fukuda, an economics professor at the University of Tokyo. “We must remember that there are so many things we do not know about the possible effect of BOJ debt underwriting.”