Bank Of Japan Governor Makes Early Exit Amid Heavy Government Pressure
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Bank of Japan Governor Masaaki Shirakawa will step down on March 19, almost three weeks ahead of schedule, reported Reuters on Tuesday, accelerating Prime Minister Shinzo Abe’s push for more aggressive monetary easing, which Shirakawa had staunchly opposed.
Bank of Japan Governor Masaaki Shirakawa will step down on March 19, almost three weeks ahead of schedule, reported Reuters on Tuesday, accelerating Prime Minister Shinzo Abe’s push for more aggressive monetary easing, which Shirakawa had staunchly opposed.
Shirakawa, 63, was originally scheduled to leave his post on April 8, but told reporters that he would instead exit on the same day as two of his deputy governors, so as to facilitate a leadership transition at Japan’s central bank.
“It’s natural to start at the same time, and the benefits are great,” he told reporters in Tokyo, denying that he had resigned due to intense government criticism, including labeled Shirakawa as a lame-duck governor ever since Abe swept into power last December.
Among the outgoing governor’s achievements include assuring the stability of Japan’s financial system and economy amid the global financial crisis, and once during the March 2011 earthquake and tsunami.
However, his failure to end four consecutive years of deflation stoked criticism from lawmakers – with Prime Minister Shinzo Abe, in particular, determined to see greater monetary stimulus from the BOJ as a method to end price declines.
[quote]“It’s (Shirakawa’s early exit) the equivalent of waving a white flag for unconditional surrender,” told Shuichi Obata, senior economist at Nomura Securities Co. in Tokyo, to Bloomberg. “Shirakawa didn’t share the the government’s view that the central bank is responsible for ending deflation.”[/quote]Related: Japan Records Fourth Straight Year Of Deflation
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The spotlight, as such, now turns to possible candidates to take over the role. According to Reuters, among the top prospects include Asian Development Bank President Haruhiko Kuroda, academic Kikuo Iwata, a harsh critic of the BOJ’s present policy, and Toshiro Muto, a former finance ministry executive who served as deputy governor of the central bank until 2008.
“We are going to work out without delay the schedule of submission (of candidates) to parliament for swift approval,” Akira Amari, economics minister in Abe’s cabinet, told reporters.
[quote]”The new governor should be able to communicate policy, be completely in step with the government, have a network in economic and political circles, be able to nail negotiations, and have experience as a top bureaucrat,” added Isao Iijima, a secretary to former Prime Minister Junichiro Koizumi and now an adviser to Mr. Abe, to the Wall Street Journal.[/quote]News of Shirakawa’s early exit also saw the yen slide to its weakest level in almost three years against the U.S. dollar.
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“The Bank of Japan is about to get a lot more dovish, and sooner than previously thought,” said Christopher Vecchio, a currency analyst at DailyFX, to Reuters; adding that the yen weakness trend is likely to continue, especially with the new BOJ appointment.
Prime Minister Shinzo Abe had at one point said it was “lucky” that Shirakawa’s term as BOJ government would be ending soon. The DPJ leader also asserted that the government would have a “strong voice” in naming a successor. The new chief will be nominated by the government and approved by both legislative chambers.
