(Xinhua)
Updated: 2008-03-12 14:47

TOKYO -- The Japanese House of Councilors, or the upper house, which is controlled by the opposition bloc, rejected on Wednesday the government's proposal to promote Bank of Japan (BOJ) Deputy Governor Toshiro Muto to chief to succeed Toshihiko Fukui.

Bank of Japan Governor nominee Toshiro Muto bows to lawmakers before a hearings session at Lower House of the parliament in Tokyo Tuesday, March 11, 2008. [Agencies]

The opposition bloc cited worries about the central bank's independence from the government on making monetary policies under Muto who had served as vice finance minister.

As for posts of new deputies, the nomination of former BOJ Executive Director Masaaki Shirakawa was approved, while that of Takatoshi Ito, an economics professor at the University of Tokyo, was voted down.

As the nomination of the central bank chief requires approval from both houses of the Diet, the post may be vacant for some time after Fukui's five-year term expires on March 19 although the House of Representatives, or the lower house which is controlled by the ruling Liberal Democratic Party led by Prime Minister Yasuo Fukuda, is expected to pass the nomination later this week.

The Japanese government proposed the nomination to the Diet on Friday. In seek of the appointment's smooth clearance of the Diet, Fukuda had proposed talks with major opposition Democratic Party of Japan chief Ichiro Ozawa on the matter, but received no response.

Some analysts have expressed their concerns that the vacancy of the central bank top post would harm Japan's financial credibility and pose further adverse effect to the country's economy in addition to yen's continued appreciation and depressed stock markets.