The Japanese Government is set to spend the weekend desperately concocting a nomination for Governor of the Bank of Japan (BoJ) or face the prospect of international humiliation before the G7 meeting of the world’s richest nations in just six days time.

The panic in Tokyo’s corridors of power comes after a “lost fortnight” during which the central bank of the world’s second largest economy has had only a stand-in at the helm.

Underlining the oddity of the situation, the Government's chief spokesman said: “If we can make it, we would like to have a Governor attend the G7 meeting on April 11, and not just an acting Governor.”

During the past two weeks, the need for a strong figure in charge of the BoJ could not have been more starkly highlighted. On Monday, the central bank was forced to flood money markets with a record slew of liquidity, and the following day, the central bank’s own Tankan survey revealed a stunning plunge in Japanese corporate sentiment.

Official sources told The Times that the ruling Liberal Democratic Party is expected to propose Masaaki Shirakawa as the next Governor. He is the current deputy, and has been effectively in charge since the main post became vacant for the first time since the Second World War on March 19.

Hiroshi Watanabe, the former international affairs vice minister at the Finance Ministry, is likely to get the nod as Mr Shirakawa's deputy. That is, of course, if the opposition party is prepared to concede that Japan needs a central bank governor before his absence is noted at the G7 meeting.

Analysts described Mr Shirakawa as a “timid” choice that reflects the government’s unprecedented weakness at a time of extreme turmoil on global financial markets.

Government insiders described the mood inside Japan’s parliament yesterday as “conspiratorial” – many believe that the government will only gain acceptance of its choice of Mr Shirakawa via a secret package of compromises and concessions.

Prime Minister Yasuo Fukuda’s government has been repeatedly hamstrung by the tactics of the opposition Democratic Party of Japan. Under its mercurial leader, Ichiro Ozawa, the DPJ has used its Upper House majority to block every bill proposed by the government, including three successive nominations for the post of BoJ chief.

The Prime Minister’s tactic is to play on the fact that the DPJ have already accepted Mr Shirakawa’s aptitude for high office at the BoJ by voting him through as Deputy Governor.

The DPJ’s opposition to the government’s previous choices has been partly pure obstruction and partly logical. The DPJ argues that in order to maintain the critical independence of the BoJ, it should not be governed by anyone drawn from the ranks of the overbearing Ministry of Finance.

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