A last-minute effort to avert a succession crisis at the Bank of Japan collapsed today as the opposition party said it would block the Government’s latest nomination for the new governor.

The surprise nomination of Koji Tanami, formerly of the Ministry of Finance and currently head of the Japan Bank for International Cooperation produced a name that Richard Jerram, senior economist at Macquarie, said “would not have been on a top-200 list of possible candidates.”

Senior government officials admitted to The Times that the increasingly bizarre political brinkmanship over the BoJ governorship had begun to damage Japan’s international reputation and added an extra layer of difficulty if the BoJ is now called upon by US and European central banks to support an international bid to inject liquidity into the markets.

The Government’s astonishing nomination of Mr Tanami came with just hours left to run in the current term of Toshihiko Fukui – the governor who, just barely, managed to “normalise” Japan by raising interest rates above zero last year.

A vote on Mr Tanami’s nomination in parliament tomorrow is expected to end with the same dismal result as last week’s vote on Toshiro Muto – the Government’s favoured candidate who was rejected by parliament because of his background at the Ministry of Finance.

The opposition confirmed today that it would vote against any former Ministry of Finance nominee because of the implied threat to the hard-won independence of the BoJ. Senior figures at the opposition Democratic Party of Japan were quick to drop hints that tomorrow’s vote will deliver further bad news for the Government.

“This nomination shows just how desperately implacable the Ministry of Finance is in its efforts to stamp its own methods [on the BoJ],” said Yoshito Sengoku, a senior DPJ policy maker.

In reality, say economists, the BoJ succession issue is a straightforward political showdown: there has been no serious debate on any of the candidates’ aptitude or suitability for the role of helmsman at the central bank of the world’s second biggest economy.

Mr Tanami, who is 68, does not have especially strong credentials for the job. His rise within the Ministry of Finance during the 1990s coincided with an era of spectacular financial and budgetary mismanagement in Japan, a prolonged banking crisis and the repeated failure over 10 years by the finance ministry to engineer any sustainable recovery.

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