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Tokyo accelerates reforms to advance status as global financial city

Backed by government action to remove regulatory bottlenecks, the city is moving swiftly to ensure ease of doing business for international firms.
Tokyo accelerates reforms to advance status as global financial city

Tokyo Metropolitan Government (TMG) is accelerating measures to attract global capital and talent to Tokyo while focusing on technological and green finance development to elevate the city’s status as a global financial hub.

Nakaso Hiroshi
FinCity.Tokyo Chairman

“This is an important time for Tokyo. Ahead of us lies great opportunity but also great challenges. To resolve them, we must strengthen our ability to attract the talents and capabilities of international financial firms,” said Nakaso Hiroshi, Chairman of FinCity.Tokyo, Japan’s first public-private partnership to promote Tokyo as a global financial centre.

Nakaso spoke at the “Tokyo—Asia’s new financial hub?” webinar, held on February 15, alongside three other panelists: Koike Yuriko, Governor of Tokyo, Karsten Kallevig, Special Advisor to the CEO at Norges Bank Investment Management, and Chris Durack, Co-Head of Asia Pacific at Schroders. 

Formerly the Deputy Governor at the Bank of Japan, Nakaso has led FinCity.Tokyo since its founding by TMG in 2019. Besides sharing information, his team engages foreign financial institutions and businesses to understand their needs in the Japanese market. This valuable feedback is then translated into policy recommendations.

The goal is to restore Tokyo’s status as a world-class global financial city ranking alongside New York and London. To this end, operating under its “Global Financial City: Tokyo” Vision, TMG has implemented a wide range of measures, including signing a Memorandum of Understanding with the UK’s City of London, setting up the Tokyo Financial Award, creating the Tokyo ESG Fund, and implementing a programme to identify and attract foreign financial firms and professionals.

Considering updates to the “Global Financial City: Tokyo” Vision from a medium- to long-term perspective to reflect developments in international finance, TMG is also moving speedily to invigorate green finance and implement new measures to enhance Tokyo’s attractiveness as a business destination.

Governor Koike said the city needs to “respond swiftly” to achieve its aim as Tokyo and Japan recover from the pandemic.

Koike Yuriko 
Governor of Tokyo

The Japanese government has laid the groundwork for that swift response through a series of regulatory and tax reforms to remove bottlenecks hampering investment. Among these are simplified registration procedures for foreign asset management firms entering Japan’s marketplace, the exemption of overseas property from inheritance tax for foreigners working in Japan, and tax deductibility of performance-based remuneration for corporate officers at unlisted firms. Previously, only listed firms were given those deductions. In addition, both TMG and the national government have strengthened their English-language consultation systems to attract foreign financial companies and personnel.

“These are clear signs that the government is very serious about promoting Tokyo as a financial centre,” said Nakaso. 

Foreign institutional investors welcome the new measures by TMG and the national government. “These reforms are extremely valuable and well-received from our perspective. Considerations like tax, infrastructure, the cost of living, and cultural requirements, including language, are always going to be key,” said Chris Durack, Schroders’ Co-Head of Asia Pacific, adding that equally important are opportunities to access local markets.

Various firms see business opportunities in Japan. Schroders, for instance, has seen a significant pick-up in interest for ESG funds.


As ESG becomes increasingly integrated with mainstream finance, Tokyo is boosting measures to encourage green finance. These will be “crucial in achieving a sustainable recovery for Tokyo and Japan,” explained Governor Koike. “Ensuring that Tokyo is one of the world’s most active cities in terms of green finance will be key to cementing its position as a world-class global financial city.” 

As the first step, TMG is considering realising a Tokyo green finance market. Other potential measures include increasing the amount of Tokyo Green Bonds issued and establishing a sustainable energy fund that invests in facilities such as renewable energy-based power plants and hydrogen stations.

The momentum for green finance in Tokyo is backed by the focus on sustainability maintained by both TMG and the national government. In October 2020, Prime Minister Suga Yoshihide announced that Japan will reduce overall greenhouse gas emissions to zero by 2050. In December 2020, Governor Koike presented plans to end sales of new gasoline vehicles by 2030 and gasoline motorcycles by 2035 in Tokyo. Similarly, the government has also announced all new car sales would consist of electric vehicles by 2035.

Alongside green finance, TMG regards fintech as a key to making Tokyo a world-class global financial city. Supporting the growth of fintech firms will be crucial to advance innovation in financial services. To encourage foreign fintech firms to move to Tokyo, TMG has created a variety of schemes, offering assistance with everything from conducting initial business feasibility studies and drawing up business plans through to establishing a base in Tokyo and actually launching a business. Moreover, in the next fiscal year, TMG intends to set up a fund to support the operation of businesses and other entities involved in fintech as a means of cultivating this industry.

For asset managers, too, there are rich opportunities. Japanese households have accumulated 1,900 trillion yen ($17.5 trillion) of underutilised financial assets. As much as 54.2% of these assets are allocated to bank deposits, compared with 13.7% and 34.9% in the US and Europe. “They are just waiting to be invested to generate higher returns,” said Nakaso.


Nakaso stresses that green finance, fintech and the activation of sleeping financial assets are closely linked. Tokyo’s role as a financial hub will be to bring all these opportunities together.

“Covid-19 turned out to be a wake-up call for Japan. It alerted us to the imminent challenges we have to resolve. We must accelerate digital transformation. We must be ahead of the curve in addressing the climate change. Japan has set an ambitious goal to be carbon neutral by 2050. Meeting the target requires massive capital investment and rapid technological innovation. This huge demand for investment must be financed successfully. 

What we need is a financial centre that ensures the efficient flow of capital to every industrial segment in every corner of Japan.” 

Governor Koike is convinced that the efforts to meet Tokyo’s—and Japan’s—ambitious goals will be successful. 

“Our goal is to turn Tokyo into a hub that ranks alongside New York and London as Asia’s leading global financial city. To achieve this, TMG will work with FinCity.Tokyo to further speed up its measures, collaborating closely with the national government and the private sector as it does so,” she said.

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