The Democratic Party of Japan said Tuesday evening that it will reject the government’s latest nominee to replace Bank of Japan Gov. Toshihiko Fukui, virtually ensuring the post of central bank chief will go unfilled when Fukui’s five-year term ends Wednesday.
Earlier Tuesday, the Liberal Democratic Party-New Komeito ruling bloc-led government floated Koji Tanami, governor of the Japan Bank for International Cooperation, a state-backed foreign aid agency, as the next BOJ leader.
The last-minute nomination came after the opposition-controlled Upper House last week rejected Prime Minister Yasuo Fukuda’s original choice — BOJ Deputy Gov. Toshiro Muto, a former vice finance minister — as the next central bank chief.
But the DPJ, the largest opposition force, decided in an executive meeting in the evening that it would oppose the nomination of Tanami, also a former top Finance Ministry bureaucrat, when the government’s proposal is put to a Wednesday vote in the Diet. BOJ nominees must be approved by both Diet chambers.
DPJ Secretary General Yukio Hatoyama said the party decided not to endorse Tanami’s nomination because they doubted he had enough experience in international finance, which he said is crucial for a BOJ chief at a time of global financial turmoil.
Hatoyama also looked askance at Tanami’s career as a top Finance Ministry bureaucrat. “We cannot allow the Bank of Japan to become an ‘amakudari’ destination for Finance Ministry officials,” the lawmaker said, referring to the practice of handing retiring bureaucrats sinecures outside government.
Hatoyama meanwhile said the DPJ would vote for the government’s new nominee for one of the two BOJ deputy governors, Kiyohiko Nishimura, a former University of Tokyo professor and now a BOJ Policy Board member.
Earlier in the day, DPJ Diet affairs chief Kenji Yamaoka criticized the government’s nomination of Tanami, stressing that Fukuda gave absolutely no consideration to the reasons the opposition camp rejected Muto in the first place.
The DPJ rejected Muto on grounds that appointing a former Finance Ministry official would compromise the BOJ’s independence from the government in terms of monetary policy. DPJ Secretary General Yukio Hatoyama, however, indicated Sunday that the DPJ may approve Haruhiko Kuroda or Hiroshi Watanabe — both former vice finance ministers in charge of international affairs — as the new BOJ chief.
“We rejected Muto, and now, (the nomination of) Tanami is following the same pattern,” Yamaoka said. “It will be difficult for (the DPJ) to approve” Tanami’s nomination.
Speaking to reporters prior to the DPJ’s decision, Fukuda said he chose Tanami as the new nominee because he considered him to be “just as good as Muto” for the job.
During Tuesday afternoon testimony at separate hearings at both Diet chambers, Tanami pledged that if approved as governor, he would increase the transparency and independence of the central bank while keeping lines of communication open with the public and the business world.
Tanami asserted that as head of the JBIC, he gained valuable insight into the global economy and worked closely with other countries.
Chief Cabinet Secretary Nobutaka Machimura separately told a news conference that the government chose the new nominees for their insight and experience.
“The governor and deputy of the BOJ will bear the extremely important roles of managing monetary policy and stabilizing the system,” Machimura said. The government “presented the two (nominees) for their prominent insights and experience, especially amid the current rapidly changing international financial situation.”
Regarding the DPJ’s claim that the BOJ chief should be someone who can maintain its independence from the government, Machimura argued that “there is no rule that says a person from the Finance Ministry cannot become” a BOJ chief.
Machimura also said the independence of the central bank has been maintained by law and in practice. “I don’t think that (the DPJ’s) logic — that a former Finance Ministry official cannot be put in charge of monetary policy — will be accepted by the public,” the top government spokesman said.
The ruling and opposition camps, despite their differences over the nominee, agreed to vote on Tanami’s nomination Wednesday, the day Fukui’s five-year term ends.
If the two chambers fail to agree on Tanami, the BOJ governor’s seat will be temporarily vacant. In that event, Masaaki Shirakawa, a Kyoto University professor and former BOJ executive director, is expected to serve as acting BOJ governor.
The majority of both Lower and Upper houses last week approved Shirakawa as one of the two deputy governors.
Hatoyama told reporters the DPJ also wanted to avoid a vacancy at the top of the BOJ. But he insisted the party had to be careful to choose the right person because the BOJ governor’s decisions affect citizens’ lives.
“It was a matter of leaving the top seat empty, or approving the wrong person for the job and consequently affecting the lives of the public,” Hatoyama said. “We wanted to make the risk as small as possible.” DPJ President Ichiro Ozawa, speaking earlier Tuesday, also criticized Fukuda for putting forward candidates at the very last minute.
“Everyone knew a long time ago that the BOJ governor’s term would end on March 19, and the government must have known our views and opinions, as well as those of the other opposition parties, a long time ago,” Ozawa told reporters.