Prime Minister Fumio Kishida kept his choice for the next Bank of Japan governor a secret, even from Taro Aso, the vice president of the ruling Liberal Democratic Party.

Kishida had met with both Aso and Toshimitsu Motegi, the LDP secretary-general, on numerous occasions since late 2022 to discuss who should succeed Haruhiko Kuroda as central bank chief.

The three met for about three hours on Feb. 8, but Kishida only said that he had made a choice without revealing the name of the individual.

Two days later, Kishida called Aso to give him the surprising news that economist Kazuo Ueda would be nominated for the BOJ’s top post.

Kishida, Aso and Motegi had agreed that the next BOJ governor must have an international network that would allow for quick entry into the inner circle of central bankers to get a feel for what other countries were planning in terms of monetary policy.

Another trait considered vital for the BOJ nominee was the ability to accurately pick up on messages from the market and to transmit the policy intentions of the BOJ without misinterpretation.

LONG LIST OF 20

A very small number of top aides to Kishida, including Seiji Kihara, a deputy chief Cabinet secretary, and Takashi Shimada, an executive secretary for political matters, were involved in compiling a list of about 20 candidates for BOJ governor from around summer 2022, according to sources.

The long list naturally contained the names of BOJ and Finance Ministry officials. Those two institutions have provided almost all postwar BOJ governors.

In fact, Ueda will become the first academic to head the central bank after World War II.

In addition to top executives of private-sector financial institutions, a number of scholars found their way onto the list, including Nobuhiro Kiyotaki, an economics professor at Princeton University, and Takatoshi Ito, a professor of international and public affairs at Columbia University.

In whittling down the list of candidates, Kishida and his aides consulted with LDP executives and people with ties to the BOJ and Finance Ministry, including retired officials.

Those with connections to the central bank unsurprisingly recommended that someone from the BOJ take over from Kuroda.

They strongly pushed Masayoshi Amamiya, one of the two current BOJ deputy governors, and Hiroshi Nakaso, who was a deputy governor immediately before Amamiya, the sources said.

But both Amamiya and Nakaso confided to associates that they thought it would be inappropriate for them to take over the top post.

In addition, aides to Kishida learned that Amamiya suggested that a scholar be picked.

SETTLING ON UEDA

As the search continued, attention focused on Ueda and the ties he established while studying at the Massachusetts Institute of Technology under Stanley Fischer, a former vice chairman of the U.S. Federal Reserve Board.

Among others mentored by Fischer were Ben Bernanke, a former FRB chairman who won the Nobel Economics Prize in 2022, and Mario Draghi, a former president of the European Central Bank.

That background convinced Kishida and his aides that Ueda could quickly enter the inner circle of central bankers of advanced economies.

From late in 2022, consideration shifted to the vice governors to serve under Ueda.

Kishida had indicated that he was planning a BOJ leadership team that included a scholar and officials from the central bank and Finance Ministry.

The pick from the BOJ had to be knowledgeable about the often complicated nature of overall monetary policy. A Kishida aide recommended two who fit that description: Amamiya and Shinichi Uchida, 60, whose name was submitted as a vice governor candidate to the Diet on Feb. 14.

Amamiya was a vice governor under Kuroda, and he said someone with a different perspective should serve under Ueda.

Because Uchida was also involved in compiling the blueprint for the ultra-loose monetary policy implemented under Kuroda, it was felt he would know how best to navigate a possible exit from that strategy.

As the official with ties to the Finance Ministry, Ryozo Himino, 62, a former commissioner of the Financial Services Agency, was tabbed as the other vice governor.

Not only does Himino have international experience, but he is also knowledgeable about the financial system.

Those close to Kishida hope Himino’s background will provide them with someone with the ability to minimize the effects should a financial crisis erupt.