Prime Minister Yasuo Fukuda has given up the idea of trying to promote Bank of Japan Deputy Governor Toshiro Muto to governor of the central bank, a Democratic Party of Japan source said Sunday. ( Kyodo )
The government is expected to propose a new candidate for Bank of Japan chief on Monday following the opposition-led upper house's rejection of its original nomination, as the clock is ticking toward the end of the incumbent governor's term.
Fukuda conveyed his decision to give up his initial idea to the main opposition party earlier Sunday, the DPJ source said.
Yukio Hatoyama, secretary general of the Democratic Party of Japan, indicated Sunday that the main opposition party may accept Haruhiko Kuroda, president of the Asian Development Bank, or Hiroshi Watanabe, special adviser to the Japan Center for International Finance, as a candidate for next BOJ governor.
While closely monitoring moves at the DPJ, Fukuda is expected to make a final decision on the issue of BOJ chief to avoid a vacancy at the top central bank post amid the yen's rapid advance and a sagging stock market.
The House of Councillors, where the DPJ-led opposition camp holds a majority, last Wednesday voted down the government's nomination of Muto as next central bank chief.
The following day, the House of Representatives, controlled by the ruling camp, endorsed the nomination but the appointments of the BOJ chief and two deputies require approval from both houses of the Diet.
The opposition parties argue that Muto's background as vice finance minister, the top bureaucrat at the ministry, would hurt the BOJ's independence from the government on policy decisions.
As incumbent BOJ Governor Toshihiko Fukui's five-year term will expire Wednesday, the focus of attention is now on who the government will nominate as a new candidate for the top BOJ post.
Hatoyama said on a TV Asahi program, ''We heard they are good persons,'' referring to Kuroda and Watanabe, two former vice finance ministers for international affairs.
''We have not said all former Finance Ministry officials are disqualified'' for the post of BOJ governor, Hatoyama said. ''Former vice finance ministers for international affairs have knowledge of international financial issues.''
He said he has yet to hear a judgment from DPJ President Ichiro Ozawa on the BOJ personnel issue.
A senior DPJ official said if the government nominates Kuroda or Watanabe, it would not be a proposal Ozawa could not accept.
Former Chief Cabinet Secretary Kaoru Yosano of the ruling Liberal Democratic Party, meanwhile, said the government should not nominate Muto as BOJ chief again unless it is absolutely unavoidable.
The upper house has also rejected the government's nomination of Takatoshi Ito, a University of Tokyo professor, as one of the new governor's two deputies, while backing the candidacy of Masaaki Shirakawa, a former BOJ executive director, as the other deputy.
The government is scheduled to present candidates for BOJ chief and one of the two deputy governors Monday afternoon. Both chambers will hold hearings from the two candidates Tuesday and vote on them Wednesday.
If the BOJ chief candidate does not win Diet approval, Shirakawa, endorsed by both chambers as BOJ deputy governor, is expected to serve as acting BOJ chief.