Choosing Japan’s Next Central Bank Chief: A Tricky Task

When Prime Minister Fumio Kishida was tasked with finding a replacement for outgoing Bank of Japan (BOJ) Governor Haruhiko Kuroda, the challenge was to find someone who could symbolize a departure from Abe’s unconventional policies while still appeasing pro-growth lawmakers of Abe’s powerful political faction. The job was further complicated by the need to steer the BOJ out of years of ultra-low interest rates without upending markets. After careful consideration, Kazuo Ueda, a 71-year-old university professor, and monetary policy expert, was chosen.

The search for a new chief began the mid-last year when Kishida and his aides drafted a list of potential candidates from the BOJ, the Ministry of Finance (MOF), the private sector, and academia. Other academics included Columbia University Professor Takatoshi Ito and the University of Tokyo academic Tsutomu Watanabe. The BOJ lobbied hard for a career central banker to take the job after Kuroda, a former MOF executive, presided for a rare second, five-year term that ends in April. The bank’s preferred choices were incumbent deputy governor Masayoshi Amamiya as well as former deputies Hiroshi Nakaso and Hirohide Yamaguchi, given their deep knowledge on monetary policy.

However, attempts to convince Amamiya, who was considered the top contender for the job, failed. Amamiya had made clear to associates from the outset he had no intention of taking the job, on the view he would be not be able to dismantle the stimulus he helped Kuroda create. This is when Ueda, who was well-known in global central bank circles, was chosen. Having an academic helm the BOJ is unprecedented in Japan, where the job traditionally rotates between a central banker and an official from the MOF.

Related Facts

• Kazuo Ueda is 71-years-old and is a university professor.
• The job of Bank of Japan Governor traditionally rotates between a central banker and an official from the Ministry of Finance.
• Masayoshi Amamiya was the top contender for the job but declined to take it.
• Other academics included Columbia University Professor Takatoshi Ito and the University of Tokyo academic Tsutomu Watanabe.

Key Takeaways

• Kazuo Ueda, a 71-year-old university professor, and monetary policy expert, was chosen.
• Having an academic helm the BOJ is unprecedented in Japan, where the job traditionally rotates between a central banker and an official from the Ministry of Finance.

Conclusion

Finding a suitable replacement for outgoing Bank of Japan Governor Haruhiko Kuroda was a tricky task. Prime Minister Fumio Kishida had to find someone who could symbolize a departure from Abe’s unconventional policies while still appeasing pro-growth lawmakers of Abe’s powerful political faction. After careful consideration, Kazuo Ueda, a 71-year-old university professor, and monetary policy expert, was chosen. Ueda’s selection is unprecedented in Japan, as the job traditionally rotates between a central banker and an official from the Ministry of Finance.