Japan taps ADB head for top central bank post

TOKYO (AFP) – Prime Minister Shinzo Abe Thursday nominated an experienced finance veteran to lead the Bank of Japan, selecting a kindred spirit who backs his hard-driving agenda to reverse decades of economic gloom.

Abe’s pick of Haruhiko Kuroda, the head of the Asian Development Bank who has blasted the central bank for not doing enough to lift the economy, will likely see a fresh drive for more spending and aggressive monetary easing.

Haruhiko Kuroda, president of Asian Development Bank

Japan’s business sector has been upbeat since reports of Kuroda’s possible nomination appeared last week, with shares climbing and the yen tumbling. In afternoon trade the yen weakened, with the dollar at 92.37 yen, compared with 92.16 yen in New York late Wednesday.

Kikuo Iwata, an economics professor at Tokyo’s Gakushuin University, and Hiroshi Nakaso, the BoJ’s executive director were also put forward to become Kuroda’s deputies.

The three are expected to be approved by parliament in the coming weeks.

A statement on the Philippines-based ADB website said Kuroda would step down on March 18, quoting the University of Oxford graduate as saying he was “deeply honoured” to have led the anti-poverty lender.

Earlier Thursday, the government’s top spokesman Yoshihide Suga said the nominees would “play the role of helmsmen for the ‘bold monetary policy’ that the prime minister is pursuing”.

His comments suggest the three will fall in line with Tokyo’s plans, after Abe sparred over policy with outgoing BoJ chief Masaaki Shirakawa who is stepping down on March 19, three weeks before the end of his term.

Japan’s premier, who swept to power in December elections, warned Shirakawa that he could change a law guaranteeing the bank’s independence if it did not follow his policies, stirring protest from central bankers abroad.

Abe’s prescription for the deflation-plagued economy has also sparked criticism that Tokyo is intentionally pushing down the yen’s value and risking a global currency war as rival nations race to gain a trade advantage.

But Kuroda has defended the yen’s fall as a “natural correction” after hitting a record high of around 75 to the dollar in late 2011, while deriding Japan’s chronic deflation as “abnormal”.