TOKYO (Reuters) - A prominent critic of the Bank of Japan's policymaking, who is considered a leading candidate to take over at the central bank next month, said he favoured an aggressive two-year timeframe to meet a new goal of lifting inflation to 2 percent.
Asian Development Bank President Haruhiko Kuroda declined to comment on Monday on whether he is being courted by Prime Minister Shinzo Abe to head up the Bank of Japan, telling reporters he is happy in his current position.
"A 2 percent inflation target has become a global standard, and it is a landmark decision on the BOJ's part to adopt the same target," said Kuroda, who was in Tokyo for a seminar.
"An appropriate timeframe should be about two years."
Abe is set to nominate a new BOJ governor to replace Masaaki Shirakawa, who steps down next month, and has made it clear he wants someone who will take bold policy steps to revive the economy and conquer deflation.
Kuroda, who was Japan's top currency diplomat in the wake of the Asian financial crisis in the late 1990s and has criticised Shirakawa's policies at the BOJ, is thought to be favoured by Abe's camp.
But Abe's push for a governor who will pursue radical policy is meeting resistance from his cabinet and bureaucrats, who are wary of triggering market turmoil, and Kuroda declined to comment on whether he was a candidate.
"I'm very satisfied with my current job and can't make any other comments," said Kuroda.
"I cannot respond to hypothetical questions," he said when asked what he would do if Abe asked him to become BOJ Governor.
Abe won power in December, and last month the BOJ adopted a 2 percent inflation target as a sign of its commitment to fight deflation and announced a shift to "open-ended" asset buying.
However, many investors were disappointed that even in taking unconventional steps the BOJ displayed a caution that critics say has characterised Shirakawa's term, delaying the "open-ended" buying until next year and limiting its scope.
Kuroda said there were several hundred trillion yen worth of domestic financial assets the BOJ could buy to expand its quantitative easing.
But he said the BOJ should not buy foreign-currency bonds -- something which could draw international criticism as indirect intervention to weaken the yen -- saying currency policy was run by the finance ministry.
Since November, as Abe became the election frontrunner, the yen has fallen sharply in anticipation of his economic agenda and is now near three-year lows against the dollar.
Policymakers in South Korea, Germany and elsewhere have expressed concern over the potentially destabilising global impact of the BOJ's move to quicken the pace of money creation.
"This is basically a reversal of the excessive yen gains and declines in Asian currencies that occurred after the Lehman Brothers crisis," Kuroda said.
"Abe's policies may have played some part in this."
Despite the concerns, officials from the Group of 20 industrialised and developing countries say Japan is unlikely to face pressure over the falling yen at a G20 meeting in Moscow on February 15-16.
A career bureaucrat at Japan's finance ministry before moving to the Manila-based ADB, the 68-year-old Kuroda has extensive international experience.
Former BOJ Deputy Governor Toshiro Muto, 69, is also seen as a leading candidate. Some consider Muto a safer pair of hands because he has experience both as a bureaucrat at the finance ministry and serving on the BOJ board.
Whoever Abe nominates will have to be confirmed by parliament. This could be a problem with a candidate seen a too radical, because Abe's Liberal Democratic Party does not have a majority in the upper house.
Opposition parties could try to block either Kuroda or Muto on the grounds their careers at the finance ministry meant they could not conduct monetary policy objectively.
Editing by John Mair