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TOKYO : Japan looks set to finally fill an embarrassing vacancy at its central bank as analysts predicted Tuesday the opposition would back the government's third candidate for governor, deputy Masaaki Shirakawa.
Tokyo is scrambling to end the leadership vacuum to avoid sending an acting chief to a meeting of finance leaders from the Group of Seven rich nations in Washington on Friday when global market turmoil will top the agenda.
"Japan is going to heave a sigh of relief as it can finally appoint a governor just in time for the G7 meeting," said Yasuo Goto, senior analyst at Mitsubishi Research Institute.
"With the appointment, Japan can save its face."
The post of Bank of Japan governor has fallen vacant for the first time in eight decades, forcing the central bank to began a monetary policy meeting Tuesday with no permanent head.
The main opposition party voted down the government's first two candidates to head the Bank of Japan, saying that as former top financial bureaucrats they were too cosy with the government to ensure its independence.
But the opposition is expected to back Shirakawa in a vote on Wednesday because it accepted him last month as a deputy governor, BoJ watchers said.
Shirakawa, a career central banker, is the third person nominated to take the top job at the central bank amid a political deadlock that has added to the woes of Prime Minister Yasuo Fukuda.
An expert on monetary policy, Shirakawa is seen by analysts as a safe choice who is unlikely to cave into political pressure over monetary policy.
He told a parliamentary hearing Tuesday that the top task for the BoJ was to ensure financial market stability.
"The core duty of central banks is to manage crises by providing liquidity and maintaining the stability of the financial system and markets," he said.
"Fortunately, the Japanese financial market is not yet experiencing significant chaos and is relatively stable," added Shirakawa, who was appointed acting chief last month after Toshihiko Fukui retired.
He said that the Japanese economy was likely to slow down in the near term but "is highly likely to return to gradual growth later."
While the opposition is expected to endorse Shirakawa, it has shown less enthusiasm for the government's candidate to replace him as deputy -- Hiroshi Watanabe, a former senior finance ministry official.
The government says that the next deputy governor should be from the finance ministry to ensure good coordination between monetary and fiscal policy.
Watanabe "is a man of superb character, knowledge, experience and ability. He is also one of the most accomplished individuals in Japan in international finance," top government spokesman Nobutaka Machimura told reporters.
Watanabe told lawmakers he would strive to preserve the independence of the BoJ if he is installed as one of the two deputies.
He said it was essential to work closely with other world central banks amid recent financial market turmoil.
"I believe it is necessary to tackle the issues at hand with a sense of urgency," he added. "We face a seriously difficult period for both the Japanese and global economies."
Watanabe's performance in parliament left a positive impression on some opposition lawmakers.
Democratic Party lawmaker Yoshito Sengoku noted Watanabe's "expertise in international finance."
"He thinks much of the relations with Asia and China," he told reporters.
Analysts said the top leaders of the opposition appeared unsure whether to back Watanabe.
"It appears that the party now needs to proceed cautiously as it is divided over the issue," said Goto.
- AFP/ir
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