ADB president leading name for Japan central bank job

Monday 25 February 2013 20.48
Asian Development Bank President Haruhiko Kuroda set for new top in Japan
Asian Development Bank President Haruhiko Kuroda set for new top in Japan

Prime Minister Shinzo Abe is preparing to nominate Asian Development Bank President Haruhiko Kuroda to head Japan's central bank.

The new bank chief will help spearhead moves to revive growth in the world's third-biggest economy.

Abe had been expected to announce the plan later today, according to local media, but prospects for an agreement appeared uncertain after a tentative plan for a news conference was called off.

Top members of the ruling Liberal Democratic Party were meeting with the coalition New Komeito party and opposition party leaders to seek their support for the nomination, the reports said.

The current Bank of Japan governor, Masaaki Shirakawa, will step down on March 19, three weeks before his term ends. Abe intends to formally propose his replacement to parliament within this week so as to allow a smooth succession, a government spokesman said.

"The key is to return to the bold monetary policies advocated by the Abe administration. We need to create an environment in which we can pursue those Abe policies,'' the spokesman said.

Kuroda, 67, is an Oxford-educated former vice minister of finance who is thought to back Abe's strategies for seeking to revive Japan's economy by fighting deflation through monetary easing and hefty government spending.

During his years as the country's top financial diplomat, Kuroda often objected to the yen's protracted rise against the US dollar, saying it did not reflect the fundamentals of the economy.

As head of the Manila, Philippines-based regional lender ADB, he has sought to balance the bank's mission of poverty mitigation with Asia's economic ascent and growing financial heft. He also often has urged China to ease foreign exchange controls that link the Chinese yuan to the US dollar.

Despite frequent central bank interventions in the currency markets, the yen continued its long-term ascent thanks to its status as a safe-haven, and low interest rates that encouraged an international "carry trade" of borrowing in yen and using the money to invest in the bonds of countries with higher interest rates.

Abe's support for a weaker yen has lifted share prices and spurred a further decline in the value of the Japanese currency, which has weakened by about 20% against the US dollar since last autumn.

Since taking office in late December, Abe has pushed through a raft of policies aimed at helping Japan escape from recession through heavy public works spending and other measures meant to restore sustainable growth.

Japan's economy is struggling with the aftermath of the 2011 natural and nuclear disasters, rapid aging of its population and the biggest public debt burden among leading industrial economies.