Shirakawa tipped as BOJ chief; No. 2 iffy

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The government nominated Bank of Japan Deputy Gov. Masaaki Shirakawa as BOJ chief Monday and former Finance Ministry bureaucrat Hiroshi Watanabe as deputy governor despite widespread speculation the latter will be rejected by the Democratic Party of Japan.

The nomination of Watanabe, a former vice finance minister for international affairs, is likely to stir more turmoil given the split within the DPJ, the largest opposition force, over whether to appoint the former Finance Ministry bureaucrat to the No. 2 slot at the central bank.

Weekend remarks by DPJ lawmakers, including party chief Ichiro Ozawa, suggested the party would reject Watanabe because of his background as a top Finance Ministry bureaucrat.

The DPJ earlier indicated it had no reason to reject Shirakawa’s promotion to BOJ governor, because the party endorsed him earlier and he has been serving as acting governor. But the Watanabe factor has split the party.

Yoshito Sengoku, a key DPJ lawmaker, chose his words carefully after the government submitted the two nominees. “In general, we will not automatically reject a nominee just because he or she is from the Finance Ministry,” Sengoku said.

The Liberal Democratic Party-New Komeito ruling bloc is hopeful of filling the BOJ governor’s seat before Friday’s Group of Seven summit for finance ministers and central bank chiefs in Washington.

The DPJ, likely to support Shirakawa’s promotion, is divided on Watanabe. The executives of the largest opposition party is expected to make a decision at a meeting Tuesday evening after both Diet chambers hear policy speeches by of the candidates and question them.

“We haven’t decided yet. It’s tomorrow,” Ozawa told reporters in the evening.

Both chambers of the Diet are expected to vote on the nominees Wednesday.

At first, the government and ruling bloc planned to submit the nominees for top BOJ posts around noon. But the schedule was pushed back to the early evening due to last-minute considerations over the deputy governorship.

“We need some time for coordination,” Chief Cabinet Secretary Nobutaka Machimura told reporters.

Prime Minister Yasuo Fukuda’s administration also wanted to avoid a humiliating third rejection by the Diet. Because the DPJ-led opposition dominates the Upper House, it has the decisive vote in appointing the top BOJ posts.

Asked why he nominated another former Finance Ministry bureaucrat in the face of DPJ opposition, Fukuda said Watanabe’s experience and knowledge are more important than where he has come from.

“Watanabe has worked a long time at the Finance Ministry in the area of international monetary markets and has a lot of experience and knowledge,” Fukuda told reporters in the evening.

The BOJ governor’s post has been empty since Toshihiko Fukui’s five-year term ended March 19 and after the Upper House rejected two nominees submitted by the ruling bloc to succeed him, including Toshiro Muto, a five-year BOJ deputy governor under Fukui.

Information from Kyodo added