Japan PM may pick new candidate for bank chief

The Japanese government said yesterday it was aiming for a last-minute breakthrough in a standoff over the next central bank chief to prevent a leadership vacuum in the midst of a global credit crisis.

The opposition has voted down the government's proposal to promote Bank of Japan (BOJ) Deputy Toshiro Muto to the top job, saying the former finance ministry official was too cozy with the government.

Japanese Prime Minister Yasuo Fukuda will announce his next move in the political standoff as early as Monday, said top government spokesman Nobutaka Machimura, amid speculation he will pick a new candidate.

Machimura told reporters the government wanted to find a replacement before outgoing Governor Toshihiko Fukui steps down on Wednesday.

"Prime Minister Fukuda will think over the weekend about picking someone so as to avoid a vacuum. We will take concrete action next week," Machimura said.

Fukuda told parliament he would make a decision soon on whether to resubmit Muto's nomination or come up with a new candidate.

"I think we must make the decision carefully and swiftly," he said. "It was very unfortunate [that Muto was rejected]. I am perplexed why there is disagreement."

Although the government has said Muto is the best candidate, several other names have been floated in the media as alternatives.

Some senior ruling party lawmakers are inclined to drop Muto's nomination to avoid the position falling vacant, the Yomiuri Shimbun reported.

Possible alternatives include Haruhiko Kuroda, a former senior finance ministry official who is now president of the Manila-based Asian Development Bank, the report said.

There was also speculation that the government might tap Masaaki Shirakawa, a professor and former BOJ executive director who has already been approved as a deputy governor, to take the top job.

The government could also resubmit Muto's candidacy, or ask current governor Fukui to stay on when his five-year term ends, reports said. The opposition has vowed to reject Muto again if he is renominated.