Bank of Japan (BoJ) governor Masaaki Shirakawa will step down on March 19, almost three weeks before his term was due, accelerating a leadership transition that may aid Prime Minister Shinzo Abe’s campaign for aggressive monetary easing.
Shirakawa would exit the same day as two deputy governors, he said yesterday. He was scheduled to leave on April 8. Japan’s currency slid, adding to losses against the dollar since Abe’s administration took office in December on a platform of greater monetary stimulus and a reversal of yen strength that hurts export competitiveness.
The outgoing governor assured the stability of Japan’s financial system with liquidity injections during the global credit crisis, and again in the wake of the record March 2011 earthquake and tsunami.
At the same time, his failure to end the nation’s trenchant deflation stoked criticism from legislators, and ministers have pledged a replacement who shares Abe’s determination to end price declines.
“It’s the equivalent of waving a white flag for unconditional surrender,” said Shuichi Obata, a senior economist at Nomura Securities in Tokyo. “Shirakawa didn’t share the government’s view that the central bank is responsible for ending deflation.”
The yen fell to its weakest level in almost three years against the dollar and euro yesterday, while the Nikkei closed at the highest level since September 2008.
“There was no pressure at all from the government, this was my own decision,” Shirakawa said on Tuesday after a meeting with Abe, saying it was not an act of protest.
He said that he made the decision so that the central bank’s new leadership could start together.
The shortlist to replace him is probably composed of Asian Development Bank president Haruhiko Kuroda and former BoJ deputy governors Kazumasa Iwata and Toshiro Muto, according to Masaaki Kanno, the chief economist at JPMorgan Securities Japan, who used to work at the central bank, writing in a note last month.
“The appointment of the next governor and deputies will be at the top of the government’s agenda now,” he said.