Diet stalemate over BOJ governor appointment finally comes to an end

Both houses of the Diet approved the elevation of Bank of Japan (BOJ) Vice Gov. Masaaki Shirakawa to its top post on Wednesday, putting an end to a three-week vacuum in the central bank leadership.

The approval comes shortly before the Group of Seven conference of finance ministers and central bank governors opens in Washington on Friday.

The post of central bank governor had been vacant since former Gov. Toshihiko Fukui's term expired on March 19 because the opposition-controlled House of Councillors rejected two other candidates. Shirakawa, 58, had served as acting BOJ governor over that period.

The Upper House plenary session voted Wednesday to endorse the appointment of Shirakawa as BOJ governor after the largest opposition Democratic Party of Japan (DPJ) voted for him. The House of Representatives, in which the ruling coalition holds an absolute majority, also approved the appointment.

However, the Upper House disapproved of the appointment of Hitotsubashi University graduate school Prof. Hiroshi Watanabe, 58, who previously worked as deputy vice minister for financial affairs, as vice governor.

As a result, one of the two posts of vice governor will remain vacant for the time being as the appointment of top BOJ officials needs approval from both chambers of the Diet.

"We can't immediately find another candidate who is suitable for the post. I think the post will remain vacant for now," Chief Cabinet Secretary Nobutaka Machimura told a regular press conference on Wednesday morning.

The government of Prime Minister Yasuo Fukuda initially proposed to elevate then BOJ Vice Gov. Toshiro Muto, who had previously served as administrative vice finance minister, to governor.

The DPJ rejected the proposal on the grounds that his appointment as central bank governor would run counter to the principle of separation of fiscal and financial policies. However, the DPJ supported the appointment of Shirakawa as vice governor.

The government subsequently proposed to appoint Koji Tanami, also a former administrative vice finance minister, only to be rejected by the Upper House.

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