The opposition-controlled Upper House has turned down the government proposal that Mr. Toshiro Muto, deputy governor of the Bank of Japan, become the next chief of the central bank. Since his nomination must be endorsed by both chambers of the Diet, the government will have to restart the nomination process.
With the current BOJ Gov. Toshihiko Fukui retiring March 19, there is not time much left for the Diet to decide on Mr. Fukui's successor. Both the ruling and opposition forces should do their best to form a consensus. A vacancy at the top of the BOJ must be prevented at all costs.
The global economy is facing the danger of a downturn due to the subprime mortgage crisis in the United States. Creating a vacant top position in the central bank would undermine the trustworthiness not only of the Fukuda administration but also of the Japanese economy. It could touch off speculative moves in financial markets that would harm the Japanese economy.
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