Gov't nominates BOJ's Yamaguchi as new deputy governor

TOKYO, Oct. 15 Kyodo - The government on Wednesday nominated Hirohide Yamaguchi, an executive director of the Bank of Japan, for one of the central bank's two deputy governor posts, which has been vacant over the last six months due to political wrangling.

The move signals a concession to the opposition by Prime Minister Taro Aso
following rejection by the opposition-controlled House of Councillors of part
of the government's proposals under his predecessor. His decision seems to have
worked as the largest opposition party said it will accept the proposal.
The nomination also suggested the urgency of the government, which has had to
handle the deepening crisis in global financial markets with an incomplete
central bank.
''I have heard Mr. Yamaguchi is very capable and suitable for the post,'' Aso
told reporters. ''Now is the moment when we should take action and if we do not
pick a new deputy governor, we are going to be troubled.''
A policy maven, Yamaguchi, 57, is currently in charge of the BOJ's monetary
affairs as an executive director. He has supervised the section that monitors
financial systems and conducts bank examinations.
Observers said the importance of the government's decision lies in the fact
that Yamaguchi is not from the Finance Ministry.
The Democratic Party of Japan and other smaller opposition parties had rejected
government proposals to have former top bureaucrats of the ministry assume
posts in the BOJ, arguing such a move could impact on the central bank's
independence in managing monetary policy.
The appointment of BOJ executives requires approval by both the House of
Representatives, where the coalition led by Aso's Liberal Democratic Party
maintains a majority, and the House of Councillors, which is controlled by the
DPJ-led opposition camp.
On Wednesday, Chief Cabinet Secretary Takeo Kawamura conveyed the government's
decision to nominate Yamaguchi at a meeting of representatives from the
steering committees of the lower and upper houses.
With the opposition camp refusing to accept government nominees since March,
the BOJ Policy Board has been operating with two of its nine seats vacant.
Kawamura said in a news conference that the government also hopes to present a
nominee to fill the seat of the ninth board member as soon as possible.
Aso on Tuesday called for understanding and cooperation from his political
rivals, saying the unusual situation at the BOJ must be addressed quickly in
order to deal with the current turmoil in global financial markets.
The Diet committees will hear from Yamaguchi next Tuesday.
Kenji Yamaoka, the Diet affairs chief of the DPJ, told reporters after the
Wednesday meeting that the opposition party will not object to the nomination
of Yamaguchi.
The DPJ is expected to formally approve the nomination next Tuesday, and the
lower and upper chambers will vote possibly on Oct. 24.
Smaller opposition parties, however, are still adamant.
''The financial crisis is not an excuse for the government to do anything it
wants,'' People's New Party leader Tamisuke Watanuki said in a news conference.
The BOJ has seen vacancies in its executive posts since March, when the
political wrangling began with the opposition rejecting the proposed promotion
of then Deputy Governor Toshiro Muto, a former vice finance minister, to the
helm of the central bank, arguing his background would undermine the bank's
independence in managing monetary policy.
Masaaki Shirakawa, the current BOJ governor, was the only one among the
government nominees who obtained opposition approval smoothly, first as nominee
for deputy and then as governor.
After former BOJ Governor Toshihiko Fukui ended his five-year tenure on March
19, the bank saw its top post vacant for the first time in its history.
Given the deepening crisis surrounding global financial markets since the
meltdown of the U.S. subprime mortgage market, the government proposed
Shirakawa for the governorship as an emergency measure just a few days before a
meeting of Group of Seven finance ministers and central bank chiefs in April in
Washington.
The opposition camp approved the proposal and also agreed to another proposal
to promote Kiyohiko Nishimura, a member of the BOJ Policy Board, to fill one of
the deputy governorships.
The government has fielded a number of nominees for the remaining deputy
governorship and for a seat on the policy board to succeed Nishimura, only to
see them rejected by the opposition in the upper house.
==Kyodo