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Upper house rejects nominee for Bank of Japan chief

Japanese opposition lawmakers yesterday voted down Bank of Japan deputy Toshiro Muto as the next central bank chief, defying the government, which refused to look for a new candidate.

The political standoff makes it increasingly likely that the central bank of the world's second-largest economy will be run by a caretaker governor after Toshihiko Fukui steps down next Wednesday.

"For now we aren't thinking of an alternative proposal to the original nomination," Japanese Finance Minister Fukushiro Nukaga told reporters.

Chief Cabinet Secretary Nobutaka Machimura urged the main opposition Democratic Party of Japan (DPJ) to reconsider its resistance to Muto, a former top official at the finance ministry.

The opposition-controlled upper house voted 129 to 106 to reject Muto's nomination, official results showed. The candidate must be approved by both houses of parliament.

`too cozy'

Opposition lawmakers are concerned that Muto is too cozy with the government and that his appointment might damage the central bank's independence.

The upper house also rejected the nomination of Takatoshi Ito -- a University of Tokyo professor and economic adviser to Japanese Prime Minister Yasuo Fukuda -- as one of Muto's two deputies.

However, it approved the appointment of Masaaki Shirakawa, a former executive director at the bank and now a Kyoto University professor, as a deputy governor.

If the row over the central bank governor is not resolved in time, Shirakawa could become temporary governor.
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