Multiple sources have reported that the Bank of Japan's current deputy governor, Masayoshi Amamiya, is a "strong" candidate to replace Haruhiko Kuroda as the central bank's governor.
Amamiya has served the BoJ for most of his career, earning him the nickname "Mr. BoJ" because he formulated some of the central bank's monetary easing plans. He played a key role in Kuroda's massive asset-buying program in 2013.
The deputy governor also consistently calls for ultra-low benchmark interest rates. Despite his stance on maintaining a dovish interest rate, Amamiya said the BoJ should "always" prepare ways to exit its ultra-loose monetary policy.
Analysts said choosing Amamiya meant a higher likelihood of the central bank maintaining its dovish policy for the time being, allowing the bank to phase out Kuroda's legacy stimulus at a gradual pace.
Another potential candidate for the governor position is Hiroshi Nakaso, who served as the BoJ's deputy governor until 2018. Nakaso orchestrated an exit from the central bank's first spell of quantitative easing back in 2006.
Nakaso has a long experience monitoring the BoJ's international affairs and market operations. He has often voiced concerns about the negative impacts of prolonged monetary easing, including a significant distortion in bond and money markets.
Last May, Nakaso published a book outlining his exit idea from the BoJ's ultra-lax monetary policy. He advised the bank to abandon its 10-year Treasury bond yield target and then raise the interest rates monetarily. This way, Nakaso said, the bank could reduce its balance sheet.
After Nakaso announced that he had taken up a leadership role at the Asia-Pacific Economic Cooperation (APEC) advisory council, analysts said he had likely dropped out from the BoJ race.
Hirohide Yamaguchi is also a likely contender for the governor race. He served as a deputy governor under the leadership of Masaaki Shirakawa. Yamaguchi was responsible for drafting an asset-buying scheme when the BoJ purchased exchange-traded funds (ETFs) for the first time in 2010.
He is one of the most vocal critics of Kuroda's stimulus policy, which he said relied too much on the confidence that the central bank could use monetary policy to influence public perceptions. He has also suggested the BoJ abandon the yield cap because he deemed it unsustainable.
The government will name one governor and two deputy governor candidates in front of the Japanese parliament later this month. Due to the solid majority of the ruling coalition, analysts predicted that there would not be any objection to the candidates.
Kuroda's term will end on April 8. Meanwhile, deputy governors Amamiya and Masazumi Wakatabe will conclude their terms earlier on March 19.
Candidates for deputy governors
Several names have been mentioned in the discussions of potential deputy governors. Analysts said the government would likely nominate University of Tokyo economics professor Takeo Hoshi.
Hoshi is a regular member of government panels and actively participates in BoJ's academic workshops. He is considered an expert in Japanese monetary policy. In November, Hoshi explained how the labor market's structural change could lead to higher wage inflation than in the past.
The Japanese government also reportedly considers several women for the position to increase diversity. These include BoJ executive director Tokiko Shimizu, Japan Research Institute chairwoman Yuri Okina and ex-BoJ board member Sayuri Shirai.
While Shimizu tends to lean toward a dovish policy, Okina and Shirai have repeatedly urged the BoJ to change its current approach.
There is also a possibility that top finance ministry bureaucrats like Yasushi Kinoshita will take over the deputy governor post. Financial Services Agency former commissioner Ryozo Himino is also another candidate from the bureaucracy.
Kinoshita has predicted that the BoJ will exit its ultra-dovish policy soon. He advised the central bank to move "cautiously and steadily" to avoid major market turbulence. Himino, on the other hand, has vocally expressed his disagreement with the BoJ's negative rate policy because it damages the profits of commercial banks.