REFILE-FACTBOX-Bank of Japan nominees: profiles and comments

(For more on the search for a new BOJ head, click [ID:nT55777]) (Refiles to add missing word in paragraph 15)

March 7 (Reuters) - The Japanese government nominated on Friday deputy central bank governor Toshiro Muto as the next head of the Bank of Japan, despite the threat of a veto by opposition lawmakers who control parliament's upper house.

A political wrangle over the nomination has dented the government's credibility and raised fears of a policy vacuum at the Bank of Japan when the current governor, Toshihiko Fukui, retires in less than two weeks.

Following are profiles of the government's nominees for the BOJ leadership, and some recent policy comments they have made:

TOSHIRO MUTO, 64

A BOJ deputy governor since 2003, Muto spent nearly 37 years in the Ministry of Finance and was vice finance minister before leaving to join the central bank.

Muto, long seen as heir apparent to Fukui, has worked closely with him. In policy speeches, Muto has rarely strayed from the central bank's standard line.

"Looking at the global economy, various downside risks exist. There are also uncertainties arising from the U.S. economy and global financial markets. Having said that, we have not fundamentally changed our main economic scenario," Muto said in January. "As that's the case, we are not thinking of changing our basic stance on monetary policy." [ID:nT203374]

Some say Muto is less hawkish than Fukui, and he might be more likely to cut rates in the face of growing fears of a U.S. recession and slower growth at home.

Analysts say Muto is adept at building consensus, and has his close ties to the government and lawmakers, but some question his ability to steer monetary policy at a time when Japan faces growing uncertainty over the global economy and markets.

Unlike Fukui, who is fluent in English, a lack of English language skills is seen as a drawback for Muto to lead the central bank at a time when coordination between major central banks is necessary. [ID:nT97234]

MASAAKI SHIRAKAWA, 58

A career central banker who served as a BOJ executive director until 2006, Shirakawa is now a professor at Kyoto University School of Government. He joined the BOJ in 1972 after graduating from the University of Tokyo and has worked in the central bank's international affairs and financial market sections.

He received a master's degree in economics at the University of Chicago in 1977.

In an interview with the Nikkei business daily last September, he said central banks must deal with credit market turmoil by providing ample funds.

But he also said Japan could face large economic fluctuations if people began to expect that interest rate levels relative to real economic conditions would remain low for a long time.

"The question is not whether rising asset prices per se create a bubble," He said in the interview.

"We need to look at the combination of rise in asset prices, rapid credit expansion and rise in investments and whether it is sustainable. We need to look at both prices and financial imbalances to judge economic risks." Shirakawa said in 2003 that the kind of inflation targeting that was then being hotly debated in Japan as a way of ending deflation would not work and could destabilise financial markets.

TAKATOSHI ITO, 57

A Harvard-educated economist, Ito is a professor of economics at the University of Tokyo and a member of the government's top economic advisory council. A fluent English speaker, Ito has also worked at the International Monetary Fund and has taught at University of Minnesota and Harvard.

He is a known advocate of inflation targeting, which the BOJ has so far been wary of adopting as it believes that such a framework could hurt flexibility in the BOJ's monetary policy.

Ito was a senior finance ministry official working on currency policy from 1999 to 2001, and is seen as having a close relationship with the Ministry of Finance.

Ito told Reuters in an interview on Jan. 30: "There is a 50-50 chance for the next (BOJ) move to be either a rate hike or rate cut." [ID:nTKU002910]

Asked if he thought a rate cut was necessary, Ito said: "There may be a situation where a rate cut may be appropriate, although we have not reached that stage yet."

"But the possibility for facing a situation in which a rate cut will be needed is no longer zero." (Reporting by Tokyo Policy Desk; Editing by Rodney Joyce)