Japan Accelerates Work to Select Next BOJ Chief

Tokyo, Feb. 6 (Jiji Press)--Japan's government and ruling coalition are accelerating their work to select the next chief of the Bank of Japan after current BOJ Governor Masaaki Shirakawa revealed his decision Tuesday to step down on March 19, before the April 8 end of his official five-year term. Major candidates for Shirakawa's successor are Toshiro Muto and Kazumasa Iwata, both former deputy governors of the central bank, Gakushuin University Prof. Kikuo Iwata, University of Tokyo Prof. Takatoshi Ito, and Asian Development Bank President Haruhiko Kuroda. All five are advocates of aggressive monetary easing, including an inflation target, and would meet a requirement set by Prime Minister Shinzo Abe that the next BOJ chief should be someone who shares the monetary policy stance of the government. At its latest monetary policy meeting on Jan. 21-22, the BOJ decided to introduce a 2 pct inflation target. Also, the government and the BOJ issued a joint statement underscoring their resolve to overcome deflation and their intention to work together to achieve that goal. The government's nominees for BOJ governor and two deputy governors need to be approved by both chambers of the Diet, but the ruling coalition of Abe's Liberal Democratic Party and New Komeito currently lacks a majority in the House of Councillors, the upper chamber. Some opposition parties, including Your Party, the fourth-largest force in the Upper House, are likely to reject any former Ministry of Finance official for the top BOJ post, while the major opposition Democratic Party of Japan is unlikely to set preconditions on nominees' backgrounds. Abe has not ruled out a possibility of choosing a former MOF official, while Minister of Finance Taro Aso has expressed his reluctance to pick an academic as Japan's top central banker. Among the five candidates, Muto, former vice minister of finance and currently chairman of the Daiwa Institute of Research, was nominated for BOJ governor but rejected by the Upper House in March 2008. Muto, 69, served as BOJ deputy governor for five years from March 2003. Muto's advantage is believed to be his strong connections with bureaucrats and politicians. Kazumasa Iwata, 66-year-old president of the Japan Center for Economic Research, served a five-year term as deputy BOJ governor along with Muto after working for the now-defunct Economic Planning Agency. He has also worked as professor at the University of Tokyo. During his term, Iwata voted against a proposed interest rate hike at a meeting of the BOJ Policy Board in February 2007. He is calling on the BOJ to purchase foreign bonds as a monetary easing step. Kikuo Iwata, 70, is one of Abe's advisers on monetary policy and also a major proponent of the policy of overcoming deflation through drastic monetary easing steps. Ito, 62, was one of private-sector members of the government's Council on Economic and Fiscal Policy during Abe's first term as prime minister, which ended in September 2007. Ito was rejected as BOJ deputy governor in March 2008 due to opposition from the DPJ. Kuroda, 68, has a close relationship with Abe. Kuroda, who has been in the post of ADB president since February 2005, regularly advises Abe on international financial affairs. He has served as vice minister of finance for international affairs, working as Japan's top financial diplomat. END