PM asks BOJ governor to continue

TOKYO, March 12: The governor of Japan's scandal-tarred central bank said on Thursday he had told the Prime Minister he wants to resign, but...

TOKYO, March 12: The governor of Japan’s scandal-tarred central bank said on Thursday he had told the Prime Minister he wants to resign, but the premier prevailed on him to stay on for now.

Bank of Japan (BOJ) Governor Yasuo Matsushita phoned Prime Minister Ryutaro Hashimoto on Wednesday and said he wanted to step down after a senior central bank official was arrested on suspicion of taking bribes from private banks, said the top government spokesman, Kanezo Muraoka.

Matsushita confirmed that he had made the request and repeated in parliament his apology for the scandal. "I am the supervisor for overall BOJ operations. In that sense, my responsibility is most serious," he said.

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Hashimoto said he took the resignation offer seriously but he wanted Matsushita to remain at his post "for the time being", Muraoka, the Chief cabinet secretary, said at a news conference.

Matsushita said he would fulfil his current duties, which were to find the cause of the scandal involving a BOJ official who had beenarrested and to take steps in consideration of future developments. In the markets, the yen slid overnight to a seven-week low against the dollar on expectations Matsushita would resign and the currency remained weak in Tokyo trading on Thursday. There was little direct impact on Japanese stocks and bonds, except to exacerbate an already gloomy mood. Share prices fell, and benchmark government bond yields dipped to another record low.

The 72-year-old central banker, whose five-year term still has two years to run, said on Wednesday he wanted to remain in his post to help the BOJ’s internal inquiry into the scandal.

Japanese media speculated he will step down by the month’s end, before a revised law takes effect on April 1 granting the BOJ more autonomy from the government while making the central bank more accountable in its reporting to parliament.

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The government spokesman said it is up to Matsushita whether to stay or quit, adding that the government has not begun discussing a successor.

The taskof replacing Matsushita appears tough, as the traditional sources for the top post — the BOJ, the Ministry of Finance (MOF) and even the private banking sector — have all been tainted by allegations of bribery.Media reports speculated that the government might look to academia or the legal profession. On Wednesday, prosecutors arrested Yasuyuki Yoshizawa, 42, Chief of the Capital Markets Division at the BOJ Credit and Market Management Department, for allegedly taking bribes from major commercial banks in return for leaking information about the central bank’s market operations.

The widening probe into influence-peddling among Japan’s top financial authorities has already plunged the MOF into turmoil.