A changing of the guard at the Bank of Japan gives the government more influence over the central bank and points to closer relations between them and likely a gradual, though not radical, policy change.

The nominee for governor, Toshihiko Fukui, is not about to declare a new era in policy, but a growing sense of crisis over an economy struggling to emerge from a fourth year of falling prices will ensure "no change" is not an option.

"Flexibility will be sought from the BOJ as the world economy weakens on geopolitical risks," said Yasuhiro Onakado, head of market research at Mitsui Sumitomo Bank.

"We need them to do it well." The key issue determining whether Japan's monetary policy will deliver is how the three new officials interract with the other six voting members on the BOJ's Policy Board, and whether they can swing opinions their way at policy meetings.

The trio replace incumbent governor Masaru Hayami and his two deputies, who are stepping down at the end of five-year terms.

Under Hayami, the BOJ has resisted pressure from politicians to pursue unorthodox policies such as buying land and corporate or foreign bonds to beat deflation by getting more cash flowing through the economy.

The nominees for the two posts of deputy governor, Toshiro Muto and Kazumasa Iwata, both favour a looser version of current policies, though by different methods.

Muto will push the view of his former masters at the Ministry of Finance (MOF) that the BOJ should buy more government bonds. Iwata is a proponent of radical steps such as deliberately creating inflation, and has the backing of the Cabinet Office, where he is now in charge of analysing economic policy.

Three of the six voting board members, Shin Nakahara, Hidehiko Haru and Toshikatsu Fukuma, also favour cautious changes within the framework of existing monetary policies.

Assuming Muto and Iwata vote for further easing, the maths point to a majority for at least tweaking the current policy, possibly by increased purchases of government bonds.

A combination of Iwata's radical stance, government pressure for action - channelled through Muto - and sheer economic necessity should conditions worsen could even sway the others on the board towards stronger action, analysts said.

"Including the choice of deputies, I get the impression the power of the MOF has increased," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

"But with a lock on fiscal policy, deflation won't go away, so there's a high probability that they will be pushed towards inflation targeting."

A Reuters poll of 48 economists and analysts yesterday showed that 91 per cent see the BOJ under its new leadership lifting a nominal ceiling on government bond purchases, while only 18 per cent see it adopting an inflation target.

On whether the BOJ will buy more exchange traded funds (ETFs) - funds that trade like stocks - the respondents were more evenly split, with 49 per cent seeing it as possible and 51 percent against.

Other analysts say it is unlikely Fukui would want to put himself on the wrong side a majority, which could mean a watering down of policy proposals.

"The governor appears to carry an influence far in excess of his single vote on the nine member monetary policy board," said Richard Jerram, chief economist at ING Securities.

"In terms of the strength of their economic arguments, Iwata seems likely to be able to dominate Fukui. However, if Fukui, as governor, says 'no' then it seems unlikely that the rest of the board will vote against him."

The new triumvirate may, however, achieve another of the aims of the government - improved cooperation between the government and the BOJ.

"The appointments augur well for a much increased level of coordination of policy between the various arms of government policy-making - monetary, fiscal, banking, structural reform," said Paul Sheard, chief economist for Asia at Lehman Brothers.

The prime minister had resisted the temptation to make "flamboyant" appointments. "Rather, the government is filling all the positions from key government agencies concerned... in that sense, substance has taken precedence over form," Sheard said.

Both Finance Minister Masajuro Shiokawa and Finance and Economics Minister Heizo Takenaka reiterated their calls for this at news conferences on Tuesday.

Behind the calls lies a perception among many in the government that the Bank of Japan has deliberately obstructed its efforts to get reforms pushed through.

Although Hayami has opposed radical measures, particularly inflation targeting, he did take the BOJ down a new path with his ultra-loose "quantitative easing" policy, which flooded the financial system with money and brought interest rates near zero.

If the policy has had little effect it is largely because of the poor state of the banking system, which meant that much of the surplus cash went straight into the banks' reserves instead of out to the companies and individuals who needed it.

Fukui, like Hayami, believes that monetary policy must go hand in hand with efforts from the government in terms of fiscal policy. He has called for changes to the way the government spends its money as a way to beat deflation.