Japan Nominates Yamaguchi to Fill BOJ Deputy Post

By Toru Fujioka

Oct. 15 (Bloomberg) -- Japan's government nominated Hirohide Yamaguchi for deputy governor at the central bank, one of two positions that have been left vacant for seven months amid political wrangling.

Takeo Nishioka, a lawmaker of the opposition Democratic Party of Japan, told reporters of the nomination in Tokyo today. Yamaguchi, 57, is one of six executive directors at the bank. The nomination needs the approval of both houses of parliament.

The appointments have been a sticking point for the government as five of its nominees have already been rejected by the opposition-controlled upper house since March. The global financial crisis and unprecedented coordinated action by central banks around the world may make it more difficult for the opposition to reject Prime Minister Taro Aso's candidate.

``Filling the Bank of Japan positions is part of the government's efforts to cope with the global financial turmoil,'' said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo. ``There's no good reason for the DPJ to oppose given the rout in markets.''

DPJ lawmakers are unlikely to object to Yamaguchi, Nikkei English News reported, citing Kenji Yamaoka, head of the party's Diet affairs committee.

Yamaguchi, who has been at the central bank for 34 years, advises the policy board and oversees the bank's planning division. He has an economics degree from Tokyo University.

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Both houses are scheduled to question Yamaguchi on Oct. 21 and vote on his appointment on Oct. 24. If approved, he will join Kiyohiko Nishimura as one of the bank's two deputies.

Kazuhito Ikeo, a Keio University professor, was the latest person rejected to fill a seat on the board in June after being described ``not suitable'' by an opposition party which ran former Peru President Alberto Fujimori on its last ticket when he was under house arrest.

Since the rejection of three Ministry of Finance officials -- Toshiro Muto, Koji Tanami and Hiroshi Watanabe -- for the bank's top posts, the government has refrained from nominating public officials to the central bank. The DPJ rejected those candidates on the grounds that their experience at the ministry would reduce the independence of the central bank.

The Bank of Japan yesterday said it will offer lenders as many dollars as they want, joining European counterparts in attempting to lower borrowing costs in money markets and freeing up credit. It also announced measures to improve companies' access to cash, expanded the range of Japanese government bonds it accepts from lenders, and suspended a program of selling shares it bought from banks between 2002 and 2004.

The Nikkei 225 Stock Average suffered a record decline last week and has lost more than a third of its value this year. The government yesterday released measures to stabilize financial markets including easing restrictions on company buybacks and halting sales of state-owned shares.

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net