Mumbai: Global financial institutions hit by the US subprime mortgage crisis are estimated to have suffered losses to the tune of $215 billion, with about 55 per cent of that coming from the United States, Japan's financial regulator said.

The estimates by the Financial Services Agency (FSA) comes close on the heels of an earlier report by JPMorgan Chase & Co, which said Wall Street banks are facing a "systemic margin call" that could deplete them of up to $325 billion in capital.

European losses totalled about 8 trillion yen ($78.5 billion), while Asia and Canada together accounted for about 1.4 trillion, FSA chairman Takafumi Sato said.

He said while Japan's financial institutions have so far avoided any massive subprime losses, they have not escaped unscathed.

FSA put subprime losses at Japanese banks at 600 billion yen in the last quarter of 2007, with total exposure to subprime investments at 1.5 trillion yen.

Japan is considering investing some of its trillion-dollar currency reserves to help revitalise its own economy. But Japanese authorities are still debating whether to shift public funds into riskier assets even as its economy wrestles with huge national debt and a shrinking population that is struggling to support a growing number of pensioners.

The sovereign fund plan is expected to reverse the economy's slow decline as an international financial centre.

Japan plans to lure star fund managers from overseas to manage the money, giving a boost to the financial services industry at a time when foreign investors are becoming increasingly disillusioned with Japan.

Japan's foreign exchange reserves - which topped one trillion dollars last month - are the second largest in the world after those of China, whose sovereign fund has invested three billion US dollars in private equity firm Blackstone and five billion US dollars in Wall Street giant Morgan Stanley.

About 95 per cent of Japan's forex reserves are invested in US treasuries, and it would be hard to sell those without the approval of the US government.

But Japan also has 1.75 trillion yen ($17 billion) from interest and dividend income in the reserves, which could be invested without selling any US government bonds, he said.

Some of Japan's 150 trillion yen in public pension funds may also be more actively managed to try to improve returns.

A Japanese sovereign fund could potentially have a huge impact on global financial markets, but experts say there are many obstacles to its creation.

If Japan dumps its dollar holdings, the ailing US currency could plunge even further, hurting Japan's exporters and threatening the gradual recovery of its economy from recession in the 1990s, experts warn.