Thursday, February 28, 2013
DJ: Abe Submits Nomination Of ADB's Kuroda As BOJ Gov To Parliament
TOKYO--Japanese Prime Minister Shinzo Abe moved a step closer Thursday to having a proponent of his aggressive monetary easing policies become head of the Bank of Japan, after the government submitted its nominee for the top job to parliament.
The nominations for new BOJ leadership handed by Cabinet to a parliamentary committee included Asian Development Bank President Haruhiko Kuroda for governor, setting the stage for a vote in two weeks' time.
In addition to Mr. Kuroda, a longtime advocate of inflation targeting, the Cabinet nominated academic Kikuo Iwata--a harsh critic of past BOJ policies--as one of his two deputies. Hiroshi Nakaso, a senior BOJ official in charge of international affairs, was picked as the other one.
Government officials said earlier this week Mr. Abe would nominate the 68-year-old Mr. Kuroda to replace current governor Masaaki Shirakawa, and there were no surprises in the lineup handed in Thursday.
Mr. Abe came to power in December on a platform calling for more action from the BOJ to beat deflation, and succeeded in getting the central bank to commit to a 2% inflation target in January. He has criticized policies under Mr. Shirakawa as being inadequate, and once said he looked forward to replacing the 63-year-old career central banker.
The nominees need the approval of both houses of parliament. Voting is expected to take place around March 15 given a customary procedure to wait 10 days after submission.
Mr. Abe has said he wants passage before March 19, when Mr. Shirakawa and his deputies are due to step down. That would avoid a vacancy in the top posts, as happened five years ago when the opposition-controlled upper house voted down the government's picks one after another.
While Mr. Abe's ruling bloc lacks a majority in the upper house, the nominees are likely to be approved as the biggest opposition party--in disarray after a crushing election defeat in December--hasn't voiced strong dissent.
The parliament will conduct hearings for each nominee ahead of the vote to explore their views on monetary policy. Mr. Kuroda and Mr. Iwata have voiced their support for "Abenomics"--a mix of monetary easing, fiscal stimulus and pro-growth policies.
Mr. Kuroda has recently stressed that the BOJ should increase and diversify its program of asset-buying, its main policy tool with interest rates near zero.
"There is plenty of room for monetary easing" in Japan, Mr. Kuroda told The Wall Street Journal in an interview earlier this month, adding that the BOJ could go beyond purchasing government bonds to include corporate bonds "or even stocks."
He also said he believed the 2% inflation target can be achieved within two years, an ambitious goal given that the BOJ is forecasting only a 0.9% price rise in the fiscal year starting April 2014.
Mr. Kuroda is also expected to use his experience as Japan's top currency official until 2003 to rebut overseas criticism that Tokyo is using easy monetary policy to drive the yen lower, triggering a war of competitive currency devaluation.
The yen has fallen more than 10% against the dollar since Mr. Abe began his campaign in November. In an indication of concerns Japan may be turning to a "beggar-thy-neighbor" policy, the Group of Seven and Group of 20 economies issued statements this month attempting to clarify appropriate central bank behavior by in influencing exchange rates.
Meanwhile, Mr. Iwata, a 70-year-old economist with Tokyo's Gakushuin University, has been a critic of the BOJ for two decades, and is regarded by those with similar views as their intellectual leader.