Former Japanese finance ministry heavyweight Toshiro Muto vowed yesterday to defend the Bank of Japan's (BoJ) independence at a crucial time for the economy, urging a divided parliament to back him as central bank chief.
Muto, currently a BoJ deputy governor, pledged to act "decisively" to pilot Asia's largest economy through the global credit crisis if he is appointed to succeed outgoing governor Toshihiko Fukui, who will step down next week.
The former top bureaucrat at the finance ministry brushed aside the opposition's concerns that his close ties to the government may damage the central bank's independence.
"I will try to win people's trust and I want to firmly secure the independence of the Bank of Japan," Muto said during a parliamentary hearing.
The main opposition Democratic Party of Japan (DPJ), which seized control of the upper house of parliament in elections last year, has warned it may block Muto's nomination.
Opposition lawmakers questioned Muto during a closed-door session of parliament, but a senior DPJ official said afterwards that the party's negative stance toward the nomination remained unchanged.
"We could not erase our concerns" about a possible loss of BoJ autonomy under Muto, DPJ lower house lawmaker Yoshito Sengoku told reporters.
"I don't have a positive feeling on him," Sengoku said. "My assessment on him has been unchanged."
Financial markets were nervous about the possibility of a vacancy at the top of the central bank when Fukui's five-year term ends on March 19.
"A delay in the selection may have a negative impact on financial markets as financial authorities around the world are getting into crisis management mode," said Makoto Ishikawa, economist at Japan Research Institute.
Muto said he would take whatever action is needed to keep the Japanese economy in sound health.
He warned that "downside risks are increasing" as the US economy deteriorates.
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