The decision, nearly certain to be rubber-stamped by the full IOC membership next month, followed a months-long investigation into alleged mismanagement at the crisis-riddled International Boxing Federation, the AIBA.
Rakhimov has denied the U.S. allegations and repeatedly blamed AIBA's current difficulties on his predecessor C K Wu, who ran against Bach for the International Olympic Committee presidency in 2013.
The board recommended stripping AIBA of its right to host amateur boxing after a report revealed legal and financial discrepancies in its ranks.
In a statement the International Olympic Committee said that it had taken the decision to suspend Aiba "due to the ongoing seriousness of the issues in the areas of finance, governance, ethics and refereeing and judging".
"These decisions were taken in the interest of the athletes and the sport of boxing", he said.
Wu, a Taiwanese national, denied wrongdoing and remains a member of the IOC, an indication that he retains the support of senior Olympic officials.
Former AIBA president Gafur Rahimov, an Uzbek businessman who has been linked to organised crime by United States authorities, is the driving force for any suspension inflicted on the AIBA, despite his resignation in March, reports Xinhua news agency.
Rakhimov, who stepped aside in March, vehemently rejects such charges and insists the allegations against him are "politically motivated lies".
He has been replaced on an interim basis by Mohamed Moustahsane.
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England has shown great class in their recent ODI series against Pakistan, where they won 5-0. And when the left-hander arrived at he crease, one fan shouted, "Get off Warner you cheat".
On why Watanabe has been given this job, Bach said it was because of his links with Tokyo 2020's local organising committee, his expertise in organising Olympic competitions and his understanding of the importance of "refereeing and fair judgement", which AIBA was deemed to have not delivered at Rio 2016. Since then there has been a lack of satisfactory progress.
Before the announcement, AIBA's leadership had insisted that the organisation had met all the requirements stipulated by the IOC.
"Every single document asked, we produced, every single requirement we have met, including our president self-suspending", he said, referring to Rakhimov's departure.
The IOC said in October that boxing's place in the Olympics was "under threat" after being introduced at the 1904 St. Louis Games and held at every Games since except Stockholm 1912.
This will include confirming the weight categories, quota allocations, and qualification events, which are scheduled to take place between January and May next year.
Boxers, Bach said, should rest assured that there will be a "fair competition in which all the athletes have equal and fair chances".
It, however, has not yet responded to a request for comment or said what its next move will be.