The Japanese plan has emerged from its experience of participating in the $17.2bn IMF-led rescue package for Thailand this summer.
The Japanese have indicated that they are concerned about being asked to play a bigger role in the world economy without any increase in their influence in the international organisations.
The planned fund, of which the other G7 countries only got wind a week or so before the start of the current IMF annual meeting, would stand ready to bail out any Asian economy suffering a financial crisis like that afflicting Thailand.
The fund would in theory attach the same tough conditions, in terms of policy reforms, as the IMF does now.
However, officials from other countries are concerned that a purely regional fund would be more vulnerable to political influence than the IMF.
Many also expressed the fear that the creation of such a big fund earmarked for rescue operations would encourage too much risky lending, for Japan's taxpayers would ultimately be providing a guarantee for loans that went badly wrong.
However, there was sympathy, outside the American delegation, for the view that Japan had a genuine grievance about its lack of influence on the international economic stage despite being an important contributor to the IMF's finances. Japan's move touches on the sensitive issue of whether the G7 - with only one Asian member and no Latin American representation - will continue to be the best forum for international policy discussions as other economies grow much larger.
Other Asian countries - Singapore, Korea, Hong Kong, Malaysia and Thailand - also recently became contributors to the IMF's New Arrangements to Borrow, the emergency overdraft fund set up in the wake of the Mexican crisis in early 1995. They too have been rewarded with little extra influence in the US-dominated IMF.
In addition, some present at the meetings in Hong Kong felt the Americans were most upset by the political implications of being excluded from future Asian packages. Many also agreed that greater co-operation between Asia's central banks and finance ministries would help prevent a repeat of the recent currency and stockmarket crisis - and might have been more effective than the secret IMF mission to Thailand in urging policy reforms.
In the end, if the Asian countries want to go ahead and set up a parallel fund, there is nothing the rest of the G7 could do to stop it. Officials said yesterday that future discussions about the plan were likely be very sensitive.
In a joint statement yesterday the US and Thailand stressed the need for the latter to implement swiftly the IMF-imposed package of economic policies and banking reform. "Thailand's financial stabilisation is of great importance to the US and to South-east Asia as a whole," it said.