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News Desk

The Yomiuri Shimbun

Publication Date : 26-02-2013

The Japanese government has decided to nominate Asian Development Bank President Haruhiko Kuroda as the next governor of the Bank of Japan and begun full-fledged negotiations to win Diet approval of its choice, sources said Monday.

Since the ruling coalition does not hold a majority in the House of Councillors, the key point will be how it wins the support of the Democratic Party of Japan, the largest force in the upper house. But there is increasing support among DPJ members to nominate Kuroda, 68, to succeed Masaaki Shirakawa, who will step down on March 19. Kuroda is a former vice finance minister for international affairs.

Appointments of central bank governors and deputy governors must be approved by both houses of the Diet.

The government has also decided to nominate Gakushuin University Prof. Kikuo Iwata, 70, and central bank Executive Director Hiroshi Nakaso, 59, as deputy governors.

Two incumbent deputy governors--Hirohide Yamaguchi and Kiyohiko Nishimura--will also leave office March 19.

Nakaso joined the central bank in 1978. He has chaired the Markets Committee of the Bank for International Settlements since 2006, and has extensive experience in international finance.

The DPJ is expected to start discussions on the matter Tuesday at a meeting of senior members of its panel on financial and monetary affairs, chaired by Seiji Maehara, former state minister for national policy.

The party is expected to decide on its response at the next meeting of its policymaking body on March 5.

On February. 5, the DPJ compiled a list of six criteria regarding the appointment of the bank governor and deputy governors. It said appointees should be well versed in financial, fiscal and economic affairs, as well as have excellent foreign language and organisational management skills.

A DPJ executive member said Monday it is difficult to oppose Kuroda's nomination, as he meets the criteria.

In 2008, the DPJ rejected the appointment of Toshiro Muto as chief of the central bank because he is a former administrative vice finance minister. The party's latest criteria, however, do not question whether a candidate is from the Finance Ministry.

There also is said to be strong concern among DPJ members that opposing the latest nomination may draw public criticism, as it could leave the post of central bank governor vacant for the time being.

Azuma Koshiishi, who heads the DPJ's caucus in the upper house, said, "The nation will not want the post unfilled for as long as two or three weeks."

However, there is concern among DPJ members that Kuroda's resignation from his ADB post could harm Japan's interests, as the presidency could be taken by China. The DPJ, therefore, is expected to ask the government to explain the matter.

Some lawmakers are cautious about Iwata's appointment because of his calls for aggressive monetary easing.

But the appointment may be possible without DPJ cooperation, given that Your Party, which holds 12 seats in the upper house, had called for Iwata to be made the new chief of the central bank.

Prime Minister Shinzo Abe explained the nominations to Liberal Democratic Party Secretary General Shigeru Ishiba on Monday morning at the Prime Minister's Office.

Iwata ready to accept

Iwata told reporters Monday he wants to accept the appointment as deputy governor if it is approved by the Diet.

Iwata said the government sounded him out on the nomination before Abe's visit to the United States last week.

Iwata is known as an advocate of ending the nation's deflation through aggressive monetary easing. He has severely criticised what he calls the central bank's passive stance toward monetary easing.