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11 December 2023

Japanese economy unhurt by absence of central bank chief

By Agencies

Japan’s economy minister on Friday played down any economic damage from the absence of a central bank chief, which is growing into a major political embarrassment ahead of a financial meeting of industrialized nations.


The Bank of Japan has no governor after the opposition controlled upper house of parliament rejected two government nominations in a row, saying they were too politically connected as former Ministry of Finance bureaucrats, and may endanger the independence of the central bank.


The five-year term of former Gov Toshihiko Fukui ended on Wednesday.


The central bank’s new deputy, Masaaki Shirakawa, whose nomination was approved last week, was named acting governor this week.


If parliament fails to approve a candidate, Japan will have no central bank governor to send to a Group of Seven meeting of financial officials and central bank leaders set for next month.


The political deadlock is being viewed as a major fumble in a nation preoccupied with appearances, especially on the international stage, amid global financial market turmoil that could require co-operation among central banks.


The political confrontation has brewed for weeks, although the world’s second-largest economy faces risks of slipping into recession, as a plunging dollar batters exports and soaring oil prices erode corporate profits.


Economy Minister Hiroko Ota expressed hopes a new governor would be named soon while brushing off worries about any possible impact on the economy.


“In the current subprime credit crisis, it is important to be able to react to risks quickly,” she told reporters.


Japanese media reports said the selection of a new governor could drag into April, as some ruling party politicians are hopeful time may calm the outrage in the opposition.


Opposition lawmakers are angry the ruling coalition rammed through legislation that require approval from only the lower house of parliament. The nomination of Bank of Japan governor needs approval from both houses.


Last week, the opposition rejected the first candidate for central bank chief, Deputy Gov. Toshiro Muto, and then voted down Koji Tanami earlier this week. (AP)