Tanami’s chances look bleak; will the BOJ have to settle on an interim governor for now?

March 19, 2008
By Ken Worsley

With current Bank of Japan Deputy Governor Toshiro Muto already having been rejected by the opposition controlled Upper House for the post of Bank of Japan Governor, Prime Minister Yasuo Fukuda seems to have set a second candidate up for failure, as the Democratic Party of Japan appears certain to reject Koji Tanami, the governor of the Japan Bank for International Cooperation, should his nomination come up for vote in the Upper House today.

Fukuda’s mistake appears to have been not only his choice to nominate another former Vice Finance Minister, which the Democratic Party of Japan holds is merely an attempt to provide golden parachutes to former ministry officials, but to have made another nomination without clearing it with the opposition. Shisaku has provided some advice for the Prime Minister, imploring him to pick up the phone and get things done himself:

Stop hoping beyond hope that the deadbeats, lunatics, fanatics and sycophants about you are finally going to buckle down and do the jobs you have been asking them to do since September…

You have a newspaper journalist as your finance minister. You have no central banker. The dollar is at 97 yen. The stock market is flopping about like a fugu on pavement.

Fukuda and his ruling party, have, however, moved one small step closer to stocking the bank’s leaderships positions: Kiyohiko Nishimura, a current member of the BOJ’s Policy Board, has been given the green light by the DPJ, and his approval should be quick in coming.

Will there be a vacancy at the top of the Bank of Japan? It’s starting to seem inevitable, as today is Toshihiko Fukui’s last day on the job, and the LDP and DPJ still seem to be quite some distance apart on choosing a candidate that will get approved by both houses of the Diet. This morning’s Nikkei is projecting that Masaaki Shirakawa, a former Executive Director of the Bank of Japan who has already been approved as Deputy Governor, will assume the role of acting governor until a replacement for Mr Fukui is found.

An acting governor, however, would be unlikely to be allowed to participate in G7 meetings, which means Japan needs to get someone in that position before the next G7 meeting for finance ministers and central bankers in April.

Filed Under Bank of Japan, Finance, Politics