EDITORIAL: BOJ Nominations Need Quick Approval

TOKYO (Nikkei)--The government's nomination of Asian Development Bank President Haruhiko Kuroda as the new governor of the Bank of Japan, and two others as his deputies, should be approved as soon as possible to ensure a smooth leadership transition at the central bank.

The appointment of the senior BOJ officials must be approved by the Diet. The government will soon present its nominees to steering committees in the upper and lower houses for final approval.

Candidates' qualifications and policy stances should be the most important selection criteria, rather than their previous employers. The nomination of a BOJ governor was derailed five years ago, as the opposition Democratic Party of Japan, which controlled the upper house, rejected the Liberal Democratic Party's nominee because he was a former Finance Ministry official.

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Kuroda is qualified to be BOJ governor. He is an expert on international finance and currency issues, and supports further monetary easing. He has ample experience handling financial problems, including the Asian financial crisis of the late 1990s, which he gained as policy chief at the Ministry of Finance. He also has a global network of personal contacts and knows many monetary officials overseas.

The government's choice of BOJ Executive Director Hiroshi Nakaso for one of the two deputy governor posts also demonstrates the government's desire for expertise and crisis-management skills at the BOJ. Nakaso specializes in international finance and has dealt with many market-related issues.

Kikuo Iwata, the other nominee for deputy governor, is expected to support Prime Minister Shinzo Abe's efforts to carry out unprecedented monetary easing. The professor of economics at Gakushuin University has long criticized the BOJ's timid monetary policy.

The BOJ's new leadership faces a daunting task: lifting Japan out of deflation at a time when the policy rate has declined to almost zero, while keeping a close eye out for unwanted side effects.

The government and the BOJ in January published a joint statement calling for measures to combat deflation and achieve sustainable economic growth. As soon as its senior personnel are approved by the Diet, the BOJ needs to get to work on its part of that task. Meanwhile, the government should respect the BOJ's independence and not interfere with how it carries out monetary policy.

(The Nikkei, Feb. 27 morning edition)

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