Japan Opposition Party Won’t Back BOJ Officials for GovernorIsabel Reynolds and Takashi Hirokawa
Japanese Prime Minister Shinzo Abe must not pick a Bank of Japan bureaucrat to be the next central bank governor and should consider former economy minister Heizo Takenaka for the post, an opposition party leader said.
Yoshimi Watanabe said his Your Party won’t support a BOJ insider to succeed Masaaki Shirakawa when his term ends in April or for two deputy governors who will step down in March. Abe has said he is seeking candidates who support his 2 percent inflation target and will enact “bold” monetary easing to overcome more than a decade of falling prices.
“If someone is chosen from within the BOJ, there will be no change in thinking,” Watanabe, 60, said yesterday in an interview. “It’s in the BOJ’s DNA to combat inflation but not deflation, so to change that we need to pick someone from outside.”
Abe needs votes from smaller opposition groups to win backing for his central bank chief in the upper house of parliament, where his Liberal Democratic Party and coalition ally New Komeito hold 102 of 242 seats. Watanabe’s party has 11 lawmakers in the chamber.
Chief Cabinet Secretary Yoshihide Suga yesterday said the ruling coalition “must show consideration to opposition parties” in regards to BOJ appointments.
“We can’t do this without their cooperation,” he told reporters in Tokyo. “It’s a very delicate issue.”
The next governor should be an economics PhD with fluent English and management skills, and while Takenaka “isn’t our only recommendation,” the former Cabinet minister would be a good fit, Watanabe said.
Asian Development Bank President Haruhiko Kuroda is “the No. 1 candidate” to head the central bank, JPMorgan Securities Japan Co. chief economist Masaaki Kanno wrote in a research note today. Kuroda fits the profile stipulated by Finance Minister Taro Aso of having experience in managing a large organization and having an international background, Kanno wrote.
During Prime Minister Junichiro Koizumi’s administration, Takenaka pushed Japan’s debt-ridden banks to write off 19 trillion yen ($214 billion) in bad loans. He also oversaw plans to privatize Japan Post Holding Co., the country’s biggest deposit holder, in an effort to spur financial industry competition.
A professor at Tokyo’s Keio University, Takenaka was tapped to serve on a new economic advisory panel for Abe, who led the LDP to a landslide victory last month. Takenaka criticized the BOJ’s response to the March 2011 record earthquake and tsunami, saying in an interview a month after the disaster that the bank’s offer of credit to businesses was a “micro policy,” when “macro monetary policy” was called for.
The yen has fallen about 5.5 percent against the dollar and the Nikkei 225 Stock Average has risen 9.2 percent since Abe’s LDP was elected on Dec. 16, pledging to weaken the yen and ease monetary policy to defeat deflation and revive the economy.
Potential candidates to succeed Shirakawa at the BOJ include Kuroda, Toshiro Muto, Kazumasa Iwata and Takatoshi Ito, the Nikkei newspaper said on Jan. 14, without citing anyone. Muto and Iwata were both previously deputy governors of the BOJ, while Kuroda and Ito worked at the Ministry of Finance.
The government is set to present its nominations for the governorship and two BOJ board positions on Feb. 15, the Nikkei said yesterday.