Japan Nominates BOJ Governor, Opposition Wary
The Japanese government put forward on Tuesday a former top finance ministry bureaucrat as its second nominee to become central bank governor, but a senior opposition lawmaker warned the surprise choice was likely to be vetoed.
The government named Koji Tanami, a former vice minister at the finance ministry and currently the head of a government-backed lending agency, the Japan Bank for International Cooperation, to head the central bank -- surprising analysts who had not seen him as a potential candidate.
The government, caught in a stalemate with opposition lawmakers who have the power to veto its choice to head the Bank of Japan, has just one day to go until the current governor, Toshihiko Fukui, is due to retire.
The government named a current BOJ board member, Kiyohiko Nishimura, to become a deputy governor at the central bank.
However, it was unclear if the new nominees would be accepted by opposition lawmakers.
Tanami, 68, held the same rank at the finance ministry, although in a different department, as that once held by Toshiro Muto -- the current deputy BOJ governor who was vetoed in parliament last week when nominated for governor.
A senior lawmaker in Japan's main opposition Democratic party, Kenji Yamaoka, said there was almost no chance the party would accept Tanami as BOJ governor. "Personally, I think it is almost impossible," Yamaoka said.
It was not immediately clear whether others in the Democratic Party shared his sentiment but the government has said it would not allow a policy vacuum at the central bank in the midst of a credit crisis.
"At a time of severe global market conditions, we would like to put forward excellent candidates for governor and deputy governor who can fully take responsibility as a member of a leading economic power," the top government spokesman, Nobutaka Machimura, told reporters.
Analysts also said it was important for the post to be filled by the time Fukui retired, and questioned how Japan could allow political squabbling over the job in a time of crisis.
One economist suggested Tanami might be more dovish than the government's past nominees, but others were left seeking more information about him.
"The issue is, does he have good understanding of financial markets? Is he good at communication, particularly with foreigners and in English?," asked Robert Feldman, chief economist at Morgan Stanley in Tokyo. "Does he know the Japanese economy thoroughly and does he have experience working in financial markets? Those are the criteria that have to be balanced."
If no new governor is confirmed by March 19, the government would have the option of installing new Deputy Governor Masaaki Shirakawa, who won parliamentary approval last week, as temporary governor.
It could also extend the term of Fukui while considering long-term options, although analysts and others have called for a permanent leader at the central bank as it works with others around the world to combat the global credit crisis.
Deadlock over Fukui's successor would not have a big impact on monetary policy, however, since Japan's interest rates are near rock bottom, analysts say.
The credit crunch and fears of a U.S. recession briefly drove the dollar below 96 yen to a 13-year low on Monday and hit Japanese shares hard. Stocks made up a little lost ground on Tuesday, gaining 1.5 percent, while the dollar held around 97 yen.