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| Japan's Big Bang Financial Reforms Implemented in the Late 90s |
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| After World War II, the Securities and Exchange Law prohibited a financial institution from conducting banking activities and securities services together. A feature of Japan's post war financial system was that there was a double "fence" placed around its financial institutions. As mentioned earlier, segmentation was created between banks. At the same time, a barrier was also built to separate banking and securities. This was possible because of the existence of financial administration that restricted competition between financial institutions. However, while such a uniquely Japanese financial system was permissible during Japan's development, it already started showing signs of being inconsistent by the time Japan's economic restoration was completed. |
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| Financial deregulation took place in the United States in the 1970s and in the United Kingdom in the 1980s. In addition to the liberalization of interest rates, liberalization of the operations of financial institutions as well as deregulation of foreign exchange regulations, etc. also advanced in Japan. The fence that separated banking and securities operations was also lowered, and banks and securities companies could enter the other's field by creating a subsidiary. Furthermore, Japan's Big Bang financial reforms, which followed the example of financial liberalization in the U.K., were also implemented in the late 1990s. The liberalization of the Japanese financial industry was virtually completed from the viewpoint of the financial system. |
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