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Wednesday, March 19, 2008
BOJ boss lacking Finance Ministry ties unthinkable
Tuesday's nomination of another former top Finance Ministry bureaucrat, Koji Tanami, for the Bank of Japan governorship shows the government continues to want someone with a background in the ministry at the post.
The government also nominated Kiyohiko Nishimura, a BOJ Policy Board member, as BOJ deputy governor. Nishimura, 54, was a University of Tokyo economics professor until he became a Policy Board member in April 2005.
It remains a mystery why the government is sticking to its guns when the Democratic Party of Japan voted down BOJ Deputy Gov. Toshiro Muto last week precisely because of his background at the Finance Ministry.
But some economists see the DPJ's stance as a good opportunity to ensure the BOJ's independence and stop the practice of former finance bureaucrats parachuting into the central bank.
"The BOJ governor post has become the issue of administrative reform," said Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo. "I don't think the DPJ should compromise easily."
Shirakawa, a former BOJ official, noted that the power of bureaucrats has increased in the past two years since Junichiro Koizumi stepped down as prime minister.
"This dispute is the reflection" of Finance Ministry bureaucrats trying to maintain power, Shirakawa said, hinting the ministry may be pressuring the Liberal Democratic Party-New Komeito ruling bloc to nominate a former top ministry official.
The Finance Ministry maintained a strong influence on the BOJ's decision-making process until 1998, when the revised BOJ law kicked in and gave the central bank more independence.
Tanami, who served as vice finance minister from January 1998 to July 1999, graduated from the University of Tokyo and entered the Finance Ministry in 1964.
The 68-year-old banker became the Japan Bank for International Cooperation's vice governor in June 2001 and was promoted to governor last October.
Tanami is not known to have made any comment in public over monetary policies.
Other economists, however, said his background as vice finance minister and JBIC governor makes him qualified to be the next BOJ chief.
"He is one of the suitable candidates," said Harumi Taguchi, an economist at Cosmo Securities Co. "I think he has no problem managing monetary policies."
Tanami served in senior posts in the ministry, including deputy director general of the secretariat and financial bureau chief, before becoming vice finance minister.