Bank of Japan Nominee Vows Independent Policy

Nominee for Bank of Japan Says There Will Be No Political Influence on Policy.

The nominee to head the Bank of Japan told lawmakers Tuesday he would preserve the central bank's independence as he tried to avoid the political sparring that has thwarted two previous candidates.

Both houses of parliament held confirmation hearings for Masaaki Shirakawa, a former Bank of Japan executive director who was nominated Monday. The political opposition rejected the previous candidates because they said they were too closely tied to the Finance Ministry.

In the lower house hearing, Shirakawa said as governor he would maintain the BOJ's independence and transparency, taking into account the mid- and long-term economic outlook, which he said was steady despite harsh conditions in the United States.

"The vacancy of the governor post is clearly an abnormal situation that must be resolved urgently," Shirakawa told the lower house hearing. "I'm determined to devote my heart and soul to fulfill the duty as governor if I can only get your approval."

Japan appeared closer to filling the nearly three-week leadership vacuum at the top of the world's second-largest economy. Prime Minister Yasuo Fukuda's government, which is seeing its approval ratings sag amid a power struggle in parliament, hopes to resolve the central bank dispute ahead of a Group of Seven financial chiefs' meeting this week.

Opposition leaders have indicated their support for Shirakawa. Recently confirmed as one of the bank's deputy governors, he has served as the interim bank chief since Gov. Toshihiko Fukui retired on March 19.

Shirakawa warned that Japan's economy likely will slow for now before resuming a mild expansion. He called the ongoing "confusion" in international financial markets "the biggest risk factor as well as the most serious (financial crisis) since the U.S. Great Depression in the 1930s."

The central bank began its two-day policy meeting for April on Tuesday. It is widely expected to maintain a key interest rate of 0.5 percent after a survey showed business confidence at major manufacturers has sunk to its lowest point in more than four years.

The nomination for BOJ governor needs approval from both chambers of parliament. The opposition-controlled upper house is scheduled to vote in the morning, with the lower house following suit in the afternoon. The timeline is in part driven by the G-7 gathering Friday in Washington. Another failure to select a central bank chief would be a major embarrassment for Japan.