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Ex- finance ministry official best for next BOJ chief: PM Abe adviser
January 22, 2013 / 10:34 AM / 5 years ago

Ex- finance ministry official best for next BOJ chief: PM Abe adviser

TOKYO (Reuters) - The next Bank of Japan governor should be a former finance ministry official, an adviser to Japan’s prime minister said on Tuesday, citing Toshiro Muto, who has served in the Finance Ministry and as deputy BOJ governor, as one example of a good candidate.

The next governor will head a central bank that has just embarked on a series of unorthodox easing steps, such as open-ended asset buying, in response to pressure from Prime Minister Shinzo Abe for a greater push to lift the economy out of recession and beat deflation.

Current Governor Masaaki Shirakawa’s term ends in April.

Isao Iijima, a political strategist for Abe, said experience at the Finance Ministry’s budget bureau and strong connections in the world of finance and politics will be vital for the next BOJ governor.

“That’s why, if I‘m to be honest, I think that a former finance ministry official would be best,” Iijima told Reuters in an interview.

“For example, Muto,” he said.

Muto, 69, served as deputy BOJ governor for five years until 2008. He heads a private think tank, Daiwa Institute of Research, and is known for his close ties with Abe’s ruling Liberal Democratic Party lawmakers and the negotiating skills with politicians that he cultivated during his career at the Finance Ministry.

Abe has made clear that he wants a BOJ governor who shares his push to reflate the economy with a hyper-easy monetary policy combined with big fiscal spending.

Shirakawa has been cautious about that approach, although on Tuesday the BOJ announced its most determined effort yet to end years of stagnation, saying it would switch to an open-ended commitment to buying assets next year and double its inflation target to 2 percent.

“There are big concerns in the international community and markets about Japan’s huge budget deficit - in that situation the selection of BOJ personnel is very important,” Iijima said, adding that the next governor must be able to communicate its strategic message to financial markets.

“That’s why, I‘m against a scholar in this post,” he said.

In addition to Shirakawa’s term ending in April, those of two deputies finish in March. The appointments require approval of both houses of parliament, and since the LDP-led ruling bloc lacks a majority in the upper chamber, backing from some opposition lawmakers will be needed.

Reporting by Antoni Slodkowski; Editing by Linda Sieg and Edwina Gibbs

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