ADB President Haruhiko Kuroda Frontrunner for BoJ Governor Post

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By Prasanth Aby Thomas | February 23, 2013 6:24 PM EST

A security guard walks out from the Bank of Japan headquarters in Tokyo

Asian Development Bank President Haruhiko Kuroda has emerged as the leading candidate for the post of Bank of Japan's next governor, according to a report from the Japanese publication Asahi Shimbun.

Kuroda is a supporter of aggressive monetary stimulus measures that Japanese Prime Minister Shinzo Abe advocates, making him an ideal candidate for the government. He also has an extensive international network in the financial world, according to government sources cited by Asahi Shimbun.

Bank of Japan's current governor Masaaki Shirakawa and his two deputies are set to step down on 19 March. Abe is expected to take a final decision on the next candidate as early as next week, in consultation with the Finance Minister Taro Aso.

Other candidates for the race include ex-financial bureaucrat Toshiro Muto and former economist to the governor and deputy governor of BOJ Kazumasa Iwata. Reuters had earlier reported that Toshiro Muto was the favourite to take up the post next.

According to a separate Reuters report, Kuroda had made aggressive interventions in the exchange rate markets to weaken the yen as a top financial diplomat between 1999 and 2003. If selected as the next BoJ chief, it would force him to cut short his term as ADB chief.

Speculations on the next central bank chief had weighed on financial market sentiments, as the decision could prove crucial to Japan's recent efforts at an economic recovery. Analysts suggest that the government will be looking for a dovish governor, who would accommodate stimulus demands.

The final call on the candidate has to receive the approval of both houses of the parliament. Since Abe's Liberal Democratic Party does not hold majority in the upper house, he will have to look for opposition support.

Abe has revealed that he is planning to ask the support of a coalition partner and the opposition once he returns from the US trip this weekend. 

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