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The next Bank of Japan governor: Questions and Answers

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(Globalpost/GlobalPost)

As finance chiefs from 20 leading economies gather in Moscow for a meeting expected to be dominated by growing talk of a currency war, Japan is readying to nominate a governor to head its central bank.

The next Bank of Japan (BoJ) governor will set policy for the world's third-largest economy. It is a key post globally, the equivalent of US Federal Chairman Ben Bernanke or European Central Bank chief Mario Draghi.

The appointment comes as Tokyo faces criticism that its monetary policy is helping push down the value of the yen, fuelling accusations it could spark a beggar-thy-neighbour race to the bottom.

In Tokyo, new Prime Minster Shinzo Abe is preparing to put forward his choice to succeed Masaaki Shirakawa, 63, who is to step down on March 19 after four years in the job.

Here are some questions and answers on the next BoJ chief.

Q: How does the nomination process work?

A: The prime minister names his choice of candidates for governor and two deputy governors, who must then be approved by Japan's parliament, known as the Diet.

The ruling and opposition parties control different chambers of the legislature, meaning a disagreement could scuttle a candidate. That was the case in 2008 when the bank operated for about three weeks without a governor before Shirakawa's appointment.

Q: Abe and Shirakawa were unable to see eye-to-eye over policy matters and the new premier has openly said he wants a more like-minded governor. What are the requirements of the job and what can people expect from the next BoJ chief?

A: The bank's stated mission is to ensure stability of prices and Japan's financial system. It is also a last-resort lender for financial institutions.

Abe's choice will almost certainly be someone who agrees with his much-touted prescription for curing Japan's deflation-plagued economy -- aggressive monetary easing. The premier has also said candidates are expected to have extensive policy knowledge and be able to communicate the bank's message to the global community.

Q: Who are the most likely candidates for the job?

A: Fewer than a dozen names have circulated in the Japanese media. They include:

-- Toshiro Muto, 69, was the top nominee of the ruling party in 2008 but was rejected by the opposition. He has been the finance ministry's top bureaucrat and a BoJ deputy governor who supports aggressive easing. He is politically connected and has an extensive knowledge of both monetary and fiscal policy. He is currently chairman of the Daiwa Institute of Research.

-- Haruhiko Kuroda, 68, is head of the Manila-based Asian Development Bank (ADB), and spent decades as a Japanese finance ministry bureaucrat. He is widely respected, though some have said Tokyo benefits from having a Japanese national heading the ADB, while Kuroda has denied being interested in the job.

-- Kazumasa Iwata, 66, is considered a strong candidate. A former government economist-turned-professor who now heads a policy think-tank, he has served as a deputy BoJ governor alongside Muto. Iwata has advocated easy money policies and inflation targeting, likely to win him favour with Abe. His recent comments about the yen's value moved markets.

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http://www.globalpost.com/dispatch/news/afp/130215/the-next-bank-japan-governor-questions-and-answers