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TOKYO - Japan looks set to finally fill the vacancy at the head of its central bank after the opposition on Tuesday backed the government's third candidate for the post, deputy governor Masaaki Shirakawa.
But a row over the Bank of Japan's top leaders rumbled on as the opposition rejected the government's choice for one of the two deputy governors.
Leaders of the Democratic Party of Japan (DPJ) approved the government's proposal to promote Shirakawa, a career central banker who is currently the acting governor, said party Secretary General Yukio Hatoyama.
The breakthrough in the political stalemate came hours after the Bank of Japan was forced to start an interest rate meeting with no governor after the post fell vacant last month for the first time in eight decades.
But the opposition rejected the government's nomination of Hiroshi Watanabe, a former senior finance ministry official, as a new deputy governor, Hatoyama said.
"The main reason is that the party is raising the banner against the practice of amakudari," he said, referring to the practice of retiring bureaucrats landing cushy jobs in the private or public sector.
The candidates must be approved by both houses of parliament, one of which is controlled by the opposition. Lawmakers will vote on the nominations on Wednesday.
Prime Minister Yasuo Fukuda, battling a slump in popularity, urged parliament to approve the two candidates.
"I believe this is the best personnel decision in the current situation," he told reporters.
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."
A career central banker and expert on monetary policy, Shirakawa is seen by analysts as a safe choice who is unlikely to cave in to 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."
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 earlier 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." - AFP/ir
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