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Saturday, March 8, 2008
Analysts see bid for balance in choice of BOJ nominees
The government's nomination Friday of Masaaki Shirakawa, a former Bank of Japan executive, and Takatoshi Ito, a member of the government's Council on Economic and Fiscal Policy, as new BOJ deputy governors prompted analysts to wonder whether one of them may become the central bank's chief five years from now.
"It is a possibility," said Susumu Takahashi, vice chairman of Japan Research Institute. "But it all depends on what the two would do during the five years."
Their nomination needs to be endorsed by the Diet, along with the BOJ governor nominee, Toshiro Muto.
Takahashi is one of the many economists who have high hopes for Ito, who has been critical of BOJ policies and is an advocate of introducing inflation targets.
Ito is an outspoken figure of the Council on Economic and Fiscal Policy and has a strong command of English, which will be an advantage in explaining BOJ policies to the public and the international markets, Takahashi said.
"The BOJ has been criticized for failing to sufficiently explain monetary policies to the market and the government," he said. "By having Ito as deputy governor, that point may improve."
In an article published in 2006, Ito, a professor of economics at the University of Tokyo, said that by introducing an inflation target, the BOJ would become more independent and be on an equal footing with the government.
Kenichi Kawasaki, chief economist at Lehman Brothers in Tokyo, also welcomed Ito's nomination, saying he may be the key to making reforms at the central bank.
"I have hopes that he will introduce inflation targets at the central bank and change the BOJ's lack of transparency," Kawasaki said.
But he also said he was still skeptical whether Ito can achieve that goal since past academics who have been tapped to became BOJ executives have changed their stance once they joined the central bank.
Meanwhile, Shirakawa has apparently been chosen to create a balance between the two BOJ deputy chiefs, said Norio Miyagawa, an economist at Shinko Research Institute Co.
"He has made efforts (as a BOJ official) to end the quantitative easing policy," Miyagawa said, adding Shirakawa's stance is probably close to the current BOJ leaders.
After graduating from the University of Tokyo, Shirakawa entered the BOJ in 1972 and worked at the central bank for 34 years until he became a Kyoto University professor in 2006.
Analysts and economists did not have much to say about Muto except that he is likely to maintain the current monetary policy or slightly shift to a more consensus-oriented management of the Policy Board meeting.
While serving as vice finance minister under former Prime Minister Junichiro Koizumi, Muto won the confidence of the eccentric leader by working to cap the issuance of government bonds at ¥30 trillion in the fiscal 2002 budget — Koizumi's campaign pledge.
Koizumi's strong confidence in Muto led him to nominate Muto as deputy BOJ governor soon after he resigned from the top bureaucrat post in January 2003.
Muto, who joined the Finance Ministry in 1966, served as vice minister for 31 months — longer than any other postwar vice finance minister.
Born in Saitama Prefecture, Muto, 64, tread the elite course of joining Kaisei Academy high school, a prestigious all-boy's private school in the capital, and going on to the University of Tokyo.
His older brother, Hiroshi, is a former mayor of the city of Kamifukuoka, Saitama Prefecture, which later merged with a neighboring town and was renamed Fujimino in 2005.