THE Japanese government's latest nominee for the central bank policy board said yesterday that managing national monetary policy has become increasingly difficult amid growing economic uncertainties and the ongoing global financial crisis.

But Hirohide Yamaguchi, 57, said he would rely on his "experience and knowledge" to "maximize the Bank of Japan's organizational strength."

"Japan's financial system is relatively stable compared to the US, but there is escalating stress," said Yamaguchi before an upper house panel. "Equity and currency markets are nervous. And the economy, suffering a slowdown in exports, is sluggish and will be sluggish for the time being."

Yamaguchi, currently an executive director at the central bank, is Prime Minister Taro Aso's choice to fill one of two vacancies on the policy board. Yamaguchi, who has worked at the central bank since 1974, currently oversees monetary affairs and runs the planning division.

The appointment must be approved by both houses of the Diet, which is scheduled to vote on the appointment on Friday. Yamaguchi spoke before a lower house panel earlier yesterday.

In his testimony, Yamaguchi defended the central bank's decision to sit out of a coordinated interest rate cut in North America and Europe earlier this month. Monetary policy should match each country's needs, he said.

The BOJ, which kept its key rate at an already low 0.5 percent, needed to take into account both downside and upside risks facing Japan's own economy, he said.

"Of course, amid the considerable global financial turmoil, if various countries make the same decision (to lower rates), it is desirable and effective to do that under a coordinated announcement," Yamaguchi said.

He added the Bank of Japan has done its part to stabilize the global financial system by flooding the money market with large amounts of liquidity since the September collapse of investment bank Lehman Brothers.