Prosecutors on Wednesday staged an unprecedented raid on the Bank of Japan, arresting a senior official in a bribery scandal that could topple the head of the central bank.

The widening probe - showing no signs of slowing - has already plunged the powerful Ministry of Finance into turmoil, with the arrest of four ministry bureaucrats and the resignation of the finance minister in January.The latest target of the investigation is Yasuyuki Yoshizawa, head of the Bank of Japan's capital markets division and in charge of its daily money market operations meant to keep banks' funding on track.

The raid on Japan's most sacrosanct financial institution set off demands for resignation of Bank of Japan governor Yasuo Matsushita, elder statesman of Japan's economic establishment.

Matsushita, 72, whose five-year term still has two years to run, said that he wanted to remain in his post to help the inquiry but also hinted that he may have to take the traditional Japanese route of quitting to accept the blame.

"The one with the greatest supervisory responsibility is the person at the head of the organization, which is me," he told a news conference.

The sight of dozens of prosecutors trooping into the bank in central Tokyo mirrored a raid on the elite Ministry of Finance last week, when two officials were arrested there for passing on inside information about securities operations.

Prime Minister Ryutaro Hashimoto said the scandals were causing both Japanese and overseas markets to lose confidence in Japan's once proud and respected financial institutions.