TOKYO (CNN) -- Japan's Prime Minister-designate Keizo Obuchi said Wednesday that former premier Kiichi Miyazawa had agreed to become finance minister in a new Obuchi Cabinet to be installed Thursday.

The confirmation ended days of speculation over the finance post, with Miyazawa believed to have agreed reluctantly to accept the challenge of rescuing the economy from recession.

The decision by the 78-year-old Miyazawa -- a former finance bureaucrat with close ties to Washington and hefty political clout -- saved premier-designate Obuchi from suffering a serious blow before his Cabinet was even off the ground.

"Unless Miyazawa accepts, my Cabinet will have no raison d'etre," Obuchi said ahead of Miyazawa's final decision.

Obuchi then told reporters: "He (Miyazawa) accepted the post wholeheartedly. I asked him to take the post under the current severe economic, financial and fiscal conditions, although I felt sorry to do so to a person who has already been a prime minister."

Miyazawa will become Japan's oldest finance minister in its post-World War II period, and Japanese media reported that his hesitation to say yes to the new post was not least because of his age.

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CNN's Tokyo Bureau Chief Marina Kamimura comments on why Miyazawa took time to accept the appointment 336K/27 sec. AIFF or WAV sound

Miyazawa, who has held 13 Cabinet posts, including finance minister, will be a key figure in the new Cabinet.

Markets and trade partners will be watching closely whether Miyazawa will take an aggressive stance on fiscal policy to get Japan out of its worst recession in decades.

He already helped draft the Liberal Democratic Party's proposed plan on rescuing the ailing banking sector and that expertise, some observers say, might help speed up the reform process.

Miyazawa is also said to have close ties with key U.S. policy-makers such as Federal Reserve Chairman Alan Greenspan, which could be a plus in dealing with a Washington, which wants bold economic action fast.

But doubts remain whether a man who has played a high-profile role in crafting banking sector policies under outgoing Prime Minister Ryutaro Hashimoto will be able to press for the drastic but painful steps many say are needed to lay the groundwork for a sustainable economic recovery.

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