TOKYO (AP) — The government has nominated Asian Development Bank President Haruhiko Kuroda to head Japan’s central bank, counting on his support for more aggressive monetary policy to help the world’s third-biggest economy escape recession and deflation.
The current Bank of Japan governor, Masaaki Shirakawa, will step down on March 19, three weeks before his term was due to end. Prime Minister Shinzo Abe favored Kuroda, whose formal nomination was made to the parliament on Thursday. A vote on the choice is due next month.
The nomination of Kuroda, 68, was widely expected. The Oxford-educated former vice minister of finance has criticized central bank policies in the past and backs Abe’s strategy for reviving Japan’s economy by fighting deflation through monetary easing and hefty government spending.
Also as expected, the government proposed that Kikuo Iwata, a professor at Tokyo’s Gakushuin University, and Hiroshi Nakaso, an executive director at the BOJ, to become the bank’s top two deputy governors.
Kuroda is viewed as part of the global “currency mafia” in Japan. During his years as Japan’s top financial diplomat, he often decried the Japanese yen’s rise against the U.S. dollar, saying it did not reflect the fundamentals of the economy.
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, to help support Japanese export manufacturers, has lifted share prices and spurred a decline in the value of the Japanese currency, which has weakened by about 20 percent against the U.S. dollar since last fall.
The yen was trading at about 92.32 yen to the dollar by midday Thursday, while the Nikkei 225 stock index had risen 1.9 percent to 11,462.63.