Deadline looms for Bank of Japan’s governorship

by Richard Kilner

Story link: Deadline looms for Bank of Japan’s governorship

Japan’s government and opposition remain unable to reach a decision as to who should succeed Toshihiko Fukui as the Bank of Japan’s governor.

The deadline is drawing extremely close, with just two days remaining to appoint Fukui’s replacement.

Because the government controls the lower house but the opposition the upper, a consensus is required for a candidate to be installed as governor.

Today the government proposed that Fukui remain as governor on a temporary basis, but the opposition has rejected the idea.

The government and Fukui’s first choice successor was deputy governor Toshiro Muto.

However, Muto’s former position as a Ministry of Finance bureaucrat raised concerns that he would not be independent enough, and the opposition vetoed his appointment.

The prospect of a rudderless central bank is never an appealing one, and given the credit crunch and the market turmoil stirred up by Bear Stearns today the Japanese will be eager to fill the vacant chair at the Bank of Japan’s head.