Japan's government on Friday nominated BNP Paribas Co chief economist Ryutaro Kono, a regular member of various advisory panels, to join the Bank of Japan's nine-member policy-setting board.
Kono, 47, will replace Seiji Nakamura, whose terms expires on April 4. He will serve a five-year term if the nomination is approved by parliament.
Kono, who has served as an economist at various financial institutions since the late 1980s, has sat several panels advising the current and past governments and would join the central bank after it surprised the markets last month with unexpected monetary easing.
As a private sector economist Kono has analyzed both the economy and markets. He has connections with the financial market and this may raise the transparency of BOJ monetary policy, said Naomi Hasegawa, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
It will be positive from the point of view that dialogue between the central bank and the market will be improved.
In his recent reports, Kono, has said it was one of the central bank's responsibilities to tame the yen's strength, but also pointed out that the BOJ needed to be aware of negative effects of ultra-loose monetary policy.
The BOJ cannot help but to take additional policy if big deflationary shocks arise but prolonged zero rate policy and government bond buying by the BOJ have big side effects so it is problematic for the BOJ to easily move for additional easing in response to small shocks.
A nomination needs to be approved by both chambers of parliament.
BOJ board nominations have at times been contentious and drawn-out in a split parliament but recent nominees, such as Koji Ishida, a veteran banker who joined the board in June last year, were approved easily.
Hasegawa said that even if the opposition would try to slow the process, the BOJ's monetary policy would be little affected.
The government has yet to put forward a candidate to replace Hidetoshi Kamezaki, whose term also expires on April 4.
The Nikkei newspaper reported earlier on Friday that Japan's government was likely to nominate Kouhei Watanabe, an advisor at trading house Itochu Corp <8001.T> to replace one of the outgoing board members. The government dropped the nomination after it was leaked to the press, a lawmaker told reporters in parliament.
Last month the BOJ surprised markets with a 10 trillion yen (75.858 billion pounds) increase in its asset buying programme as it set an inflation goal of 1 percent. The bank held policy steady at a policy-setting meeting last week.
Outgoing board member Nakamura, who used to head a unit of a Japanese freight firm, joined the board in 2007 and has mostly voted with the majority and toed the central bank's official line on the economy.
Kamezaki, the other outgoing member, was also a former business executive who voted with the board but did repeatedly stress the need to act pre-emptively against risks to Japan's economy, such as yen appreciation.
(Additional reporting by Stanley White and Shinichi Saoshiro; Editing by Tomasz Janowski)