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Parliament failed on Wednesday to agree on a new central bank chief, leaving a temporary governor to take the Bank of Japan's helm as central banks around the world work together to combat the credit crisis. Opposition parties that control the upper house vetoed a second former top finance ministry bureaucrat put forward by the government for the job.
That left Governor Toshihiko Fukui, due to retire in a few hours, with the job of appointing incoming Deputy Governor Masaaki Shirakawa as temporary governor. This means the world's No 2 economy has no permanent central bank head as global market turmoil continues and as major central banks take co-ordinated action to curb the credit crisis and steady gyrating currency, bond and stock markets.
Prime Minister Yasuo Fukuda said he felt deeply responsible for the empty BOJ post, but did not say when the government would submit its next nominee for the job.
"It's not easy to select someone for such a position as Bank of Japan governor," he told reporters. The ruling Liberal Democratic Party and the opposition Democrats blamed each other for the vacancy in the central bank leadership, the first since 1923, and one analyst questioned the future of the prime minister himself.
"Fukuda has now twice in a row put forth someone with experience at the Ministry of Finance, which the Democrats don't like. This has raised questions about Fukuda's sense," said Takehiro Sato, an economist at Morgan Stanley, adding that the prime minister may not last until mid-year.
"The first time, the criticism focused on the Democrats, but this time the criticism towards Fukuda and the ruling party is growing." At his last news conference before officially stepping down at midnight (1500 GMT), Fukui acknowledged that a prolonged vacuum could be problematic. "It is obviously doubtful that any organisation or company can operate favourably for long without a head," he said.

Copyright Reuters, 2008

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