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The government nominated a former Finance Ministry bureaucrat to head the central bank Tuesday, raising the likelihood its second choice will be rejected by the opposition a day before the current governor’s term ends.

The government proposed Koji Tanami, now governor of Japan Bank for International Cooperation, according to a parliamentary official who spoke on customary condition anonymity.

But a senior opposition legislator said he was opposed to the nomination of Tanami, 68, also a former vice finance minister.

"It would be hard to find any reasons to support him," opposition lawmaker Kenji Yamaoka said on nationally televised news.

The opposition has been urging the government to pick someone not politically connected to the nation’s powerful bureaucracy to ensure the independence of the Bank of Japan. The opposition, led by the Democratic Party of Japan, rejected the government’s first pick, Bank of Japan Deputy Governor Toshiro Muto, because he was a former Finance Ministry bureaucrat.

The confrontation has brewed for weeks, and Japan’s inability to come up with a new central bank governor has been a major embarrassment. The world’s second largest economy is in danger of slipping into a recession after six years of moderate growth, battered by the plunging dollar, volatile stock markets and soaring oil prices.

In a hearing on his candidacy in the lower house, Tanami vowed to uphold the independence of the Bank of Japan.

"The independence of the Bank of Japan policies must be ensured to win the trust of the people," he told legislators. His remarks were fed live on a monitor for reporters.

He stressed that a careful analysis of the downside risks to global growth, including rising energy prices and the U.S. credit crisis, are needed to make appropriate monetary policy decisions.

He said the Japanese economy’s growth had slowed but was continuing, despite the risks.

The term of Bank of Japan Governor Toshihiko Fukui ends Wednesday low rates payday advance. The opposition, which controls the upper house, blocked Muto’s appointment in a parliamentary vote last week.

Preliminary talks Monday between the ruling coalition, led by the Liberal Democratic Party, and the opposition, mainly the Democratic Party of Japan, failed to reach a compromise.

The ruling party coalition controls the more powerful lower house. The BOJ chief nomination needs approval from both houses of parliament.

Japanese media reports say the idea of keeping Fukui in office was proposed informally. That option was dismissed by the opposition, which has a chance at possible political leadership for the first time in decades and is angry that the government has rammed through some bills that require approval from only the lower house.

Tanami joined the Finance Ministry in 1964. In October, he became the head of JBIC, a government financial institution that handles lending and other operations to promote Japanese trade and growth.

If an agreement is not reached in time for Fukui’s departure, former BOJ Executive Director Masaaki Shirakawa - whose nomination as a BOJ deputy governor was approved last week - could step in as interim bank chief.

The government named as the other deputy Kiyohiko Nishimura, former University of Tokyo professor and now a member of the BOJ policy board.

"We have always said that we are opposed to having a vacuum," in the post of Bank of Japan governor, chief government spokesman Nobutaka Machimura told reporters. "We believe our (new) proposal will be accepted." 

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