Japanese Prime Minister Fumio Kishida nominated a Bank of Japan policy veteran and a former chief financial regulator as central bank deputies to support his pick of university professor Kazuo Ueda for the top job.
(Bloomberg) — Japanese Prime Minister Fumio Kishida nominated a Bank of Japan policy veteran and a former chief financial regulator as central bank deputies to support his pick of university professor Kazuo Ueda for the top job.
The selection of Shinichi Uchida, the central bank’s executive director and Ryozo Himino, also a former finance ministry official known for his international connections, hints at Kishida’s intention to ensure wide-ranging expertise in the BOJ’s top brass to support its new chief.
The latest choice of governor breaks from a tradition of alternating the top post between former finance ministry and BOJ officials. Ueda is expected to be confirmed by parliament as the first academic to take the central bank’s helm in its history. He holds a Ph.D. from the Massachusetts Institute of Technology, and has been referred to as Japan’s Ben Bernanke.
BOJ Veteran
Uchida has long been on economists’ list of likely deputy candidates.
For the past decade, Uchida has worked closely with Governor Haruhiko Kuroda over the BOJ’s easing policy. Choosing him means the bank’s top leadership will still have a key central banker with detailed knowledge of the stimulus program.
Uchida seems to share Kuroda’s view that the bank shouldn’t raise borrowing costs until stable inflation is in sight with solid wage gains. Still, his record of also serving Kuroda’s predecessor Masaaki Shirakawa hints at his flexibility.
Last year, he said widening the band around the central bank’s yield target would be equivalent to a rate hike and wouldn’t be favorable for Japan’s economy. Still, some months later, the bank jolted global financial markets by abruptly expanding the trading band.
What Bloomberg Economics Says…
“If he gets a deputy position, he’d probably be seen as one of the ‘brains’ supporting the governor, akin to the job that Amamiya has been doing.”
— Yuki Masujima, economist
After graduating from the University of Tokyo with a degree in law in 1986, Uchida began his career at the central bank and steadily rose up the ranks. He held a number of key positions, including director-general of the monetary affairs department in his 40s, an unusually young age for the position. He was also head of the Nagoya branch, home of automaking giant Toyota Motor Corp.
Uchida also climbed up the same ladder as current Deputy Governor Masayoshi Amamiya and former Deputy Hiroshi Nakaso, and was promoted from a director position.
Back in 2013, Uchida played a major role in designing Kuroda’s unconventional monetary policy. He was also involved in introducing negative interest rates and yield-curve control in 2016.
The 60-year old has also committed to developing the central bank’s digital currency capabilities, as an executive director in charge of payment services, along with monetary policy and financial markets.
MOF Pipeline
Himino has also long been considered one of the leading deputy candidates, and connects the BOJ leadership with the powerful Ministry of Finance. Still, his pipeline to the ministry is weaker compared with Uchida’s central role at the BOJ, given he moved to the Financial Services Agency at a relatively early stage of his career.
The 62-year old is also known for his past responsibilities beyond Japan’s borders. He was the first Japanese chairman of the Permanent Committee of the Financial Stability Board, and has expertise in international financial regulation.
Given his global experience, Himino could also contribute to maintaining the central bank’s overseas presence, backing up Ueda’s international ties.
While Himino’s experience as a chief financial regulator suggests he might be cautious about any policy that puts strain on the banking sector, he recently urged banks to find new ways to support their businesses, indirectly justifying the BOJ’s unconventional policy.
“Monetary policy isn’t decided by what’s solely good for the banks, so naturally the banks should try various methods to support their business within the environment they find themselves in,” Himino said in an interview with Bloomberg in October last year.
What Bloomberg Economics Says…
“If he gets a deputy governor post, he would probably focus on financial stability issues and oversee the BOJ’s negotiations and arrangements with other major financial authorities and central banks.”
— Yuki Masujima, economist
Himino, now an executive fellow at NLI Research Institute, began his working life at the finance ministry after graduating from the University of Tokyo in 1983.
From 2016 he served for four years as vice minister for International Affairs at the FSA and a year as the commissioner. Outside the world of finance, he is known for his research on French sculptor Aristide Maillol.
While Kishida may have sought balance in his three picks, the nomination of the men will raise further doubts about Japan’s commitment to improving gender equality. Before the selections were reported, there was heightened expectation that at least one of the positions would go to a woman.
Read More: Japan Deepens Diversity Lag With No Women Among BOJ Nominees
The new deputies will assume their roles from March 20 once they are approved by parliament. Given Kishida’s majority in both houses, his choices are almost certain to get a green light.
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