Bank Gov. Masaaki Shirakawa called the maneuver "an extremely extraordinary measure," Kyodo News reported Tuesday.
Banks count subordinated debt as supplementary capital. By shifting these lower priority debts to capital, the central bank expects lending to increase, Kyodo said.
Shirakawa made the announcement as bank policy makers headed into a two-day meeting Wednesday.
In a statement, the bank said it feared lending may tighten with continued drops in the stock market, Kyodo said.
Notable deaths of 2014 [PHOTOS]