Asia’s International Trading and Finance Centres
Edited by François Gipouloux
Chapter 2: Tokyo’s Changing Role as a Financial Center Since the Seventeenth Century
Hisasue Ryoichi INTRODUCTION This chapter aims to elucidate the role of ‘Tokyo’ as a financial center with respect to the economic history of modern Japan. First of all, before we consider the past, I must make clear that the image of Tokyo as an ‘international financial center’ is fictitious.1 This misunderstanding has been created by the image of a huge Japanese economic presence in the global economy since the late 20th century. Tokyo has played the role of the main domestic financial center since the late 19th century, and the needs of Japanese cross-border finance has been mainly provided and settled in other financial centers such as London or New York. Since the 1980s, as the second largest economic power in the world, the Japanese government has attempted to nurture Tokyo as an international financial center. Deregulation was started and it has been accelerated since the end of the 1990s, however, cross-border financial activity is still not active even now. The major reason for Tokyo’s weak position as international financial center is caused by its origin and nature. An international financial center must be an ‘open platform’ which anyone can access and use. However, Tokyo has been developed as a domestic financial center since the Edo Period, and has never been an ‘open platform’ for the cross-border financial activity. Therefore, administrators and domestic financial institutions lack the ability to understand the fundamental rules or governances of international financial center. This chapter describes the origins, developmental process and failures of Tokyo...
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