At a press conference following the G7 meeting in Rome, Nakawaya - who was flanked by Masaaki Shirakawa, the governor of the central bank, at the time, slurred: "The Bank of Japan decided to set interest rates at zero to 0.2%." The Bank of Japan's key uncollateralised overnight call rate target was cut to 0.1% in December.
Opposition lawmakers from the Democratic Party of Japan (DPJ) said the slurring was as a result of inebriation. However, Nakawaya claimed that he had taken took much cold medicine. He was also said to be suffering from jet lag. Still, he opted to step down, saying that he did not want to prevent the ruling Liberal Democratic Party from passing much-needed fiscal stimulus measures. The resignation comes a day after data showed the Japanese economy contracted by 3.3%, the most in 35 years, in the final quarter of 2008.
Though the Liberal Democratic Party controls the lower house of the Diet, the DPJ can veto any measures passed there owing to its majority in the upper house. The DPJ's stranglehold on the upper house left the central bank without a governor for a period last spring.