For Japanese Prime Minister Fumio Kishida, his country’s next central bank chief had to symbolise a departure from the unconventional policies of his predecessor Shinzo Abe — but without angering pro-growth politicians of Mr Abe’s powerful political faction.
The tricky task of steering the Bank of Japan (BOJ) out of years of ultra-low interest rates without up-ending markets required the skill to read markets and clearly communicate policy intentions, both domestically and internationally.
Kazuo Ueda, a 71-year-old university professor who has kept a low profile despite strong credentials as a monetary policy expert, ticked some important boxes.
He was branded neither an explicit dove nor hawk. While he was not even on the list of dark-horse candidates floated by the media, Mr Ueda was well known in global central bank circles.
Having an academic helm the BOJ is unprecedented in Japan, where the job traditionally rotates between a central banker and an official from the Ministry of Finance (MOF).
But the idea found traction in Mr Kishida’s administration, particularly as attempts to convince incumbent deputy governor Masayoshi Amamiya, considered the top contender for the job, failed.
The account of how Mr Kishida chose the new BOJ leadership is based on interviews and conversations with 15 sources, including former and incumbent central bank and government officials, ruling camp politicians, aides of Mr Kishida, private-sector bankers and analysts closely watching Japanese politics and policy.
Most of them spoke on condition of anonymity as they were not authorised to speak publicly, or declined to comment on record due to the sensitivity of the matter.
The search for a new chief began mid-last year, when Mr Kishida and his aides drafted a list including a range of candidates from the BOJ, MOF, private sector and academia.
Other academics in the list included Columbia University professor Takatoshi Ito, a close associate of outgoing BOJ governor Haruhiko Kuroda, and University of Tokyo academic Tsutomu Watanabe, known for his research on Japan’s deflation.
The BOJ lobbied hard for a career central banker to take the job after Mr Kuroda, a former MOF executive, presided for a rare second, five-year term that ends in April.
The bank’s preferred choices were incumbent deputy governor Mr Amamiya, as well as former deputies Hiroshi Nakaso and Hirohide Yamaguchi, given their deep knowledge on monetary policy.
Many finance ministry officials favoured Mr Amamiya, who for decades has cultivated good ties with the government.
But Mr Amamiya had made clear to associates from the outset he had no intention of taking the job, on the view he would not be able to dismantle the stimulus he helped Mr Kuroda create, sources say.
“If he becomes governor, he would have had to spend five years contradicting what he said in the past decade,” said a former MOF executive who knows Mr Amamiya well. “That’s quite hard.”
A commercial bank executive who met him late last year recalled how Mr Amamiya, when asked, flatly denied the chance o
