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Vacancy filled at Japan's Central Bank

Latest update : 2008-04-09

Japanese parliament members approved acting Bank of Japan Governor Masaaki Shirakawa's nomination for the central bank's top job, ending a political stalemate that left the bank without a head for almost a month.

Japan finally filled a vacancy at the head of its central bank Wednesday after weeks of wrangling as the opposition voted through the government's third choice just in time for key world finance talks.
  
Ending a political stalemate that left the central bank's top job empty for three weeks, both houses of parliament approved deputy governor Masaaki Shirakawa, a career central banker who has been acting head since last month.
  
The opposition voted down the first two candidates for the post of governor, saying that as former top financial bureaucrats they were too cosy with the government to ensure the independence of the central bank.
  
The top vacancy, the first in more than eight decades, had caused concern in financial markets at a time when global policymakers were stepping up joint efforts to battle a credit crunch.
  
The Bank of Japan was forced to wrap up a two-day interest rate meeting Wednesday with no governor, opting to leave its super-low interest rates unchanged at 0.5 percent, where they have been for more than one year.
  
Tokyo had sought 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.
  
But the political row was not fully over, as the upper house also rejected the government's choice for one of the two deputy governor posts, Hiroshi Watanabe, a former senior finance ministry official.
  
The government lashed out at the opposition for refusing to endorse Watanabe.
  
"It was a very disappointing result," said government spokesman Nobutaka Machimura.
  
"Frankly speaking, I don't understand why they did not agree to the nomination of Mr Watanabe, who has good knowledge in international finance, administrative skills and a respected personality," he told reporters.
  
The government says the Bank of Japan's next deputy governor should be from the finance ministry to ensure good coordination between monetary and fiscal policy, while the opposition rejects giving top jobs to former bureaucrats.
  
The BoJ has repeatedly come under pressure from the government to maintain a cheap credit policy so as to give Asia's largest economy more time to recover from years of sluggish growth and deflation.
  
But Machimura brushed aside the opposition's argument, saying: "Since when has the Bank of Japan been under the control of the finance ministry?
  
"I have to say that the other theory of the separation of the finance ministry and the central bank is also total nonsense," he added.
  
A career central banker and expert on monetary policy, the 58-year-old Shirakawa is seen by analysts as a safe choice who is unlikely to cave in to political pressure over monetary policy.
  
"I am resolved to act based on the two principles for the Bank of Japan, which are its independence and transparency," Shirakawa said on Tuesday.
  
The opposition signalled on Tuesday that it would approve Shirakawa, and Senate president Satsuki Eda announced that the upper chamber had approved him in a 231-7 vote on Wednesday morning.
  
Soon afterward the lower house, which is controlled by the ruling party, rubber-stamped his appointment in a standing vote.
  
Shirakawa spent more than three decades at the BoJ, working his way up to the post of executive director before leaving in 2006 to become a professor at the Kyoto University School of Government.
  
He was appointed one of the two deputy governors last month.

Date created : 2008-04-09

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