Financial Institutions

Publication List of this Subject

The dynamic financial policies carried out by the Meiji government played a leading role in the modernization process that began during the 1870s. Particularly important were the establishment of the Yokohama Specie Bank in 1880 and the Bank of Japan, the central bank, in 1882, and the introduction of the gold standard in 1897.

The establishment of the Yokohama Specie Bank made it possible to conduct foreign exchange transactions for importing and exporting without depending on the mediation of foreign banks. The vicious inflation that became rampant during the 1880s was stifled by the government through the newly institutionalized Bank of Japan which succeeded in drastically reducing the amount of oversupplied paper money. The introduction of the gold standard accelerated the accumulation of specie, which was lodged in foreign banks mainly in England, and contributed to the stabilization of Japan’s financial system.

There also emerged various types of financial institution intended for use by ordinary people. The postal savings system, founded in 1874, can be considered as the most successful of these. The system is all the more important because deposits are transferred to government funds to be utilized for financing various public investment activities. Among other types of financial institutions there were pawnshops, both private pawnshops and public, and mutual loan companies.

Some financial institutions were also developed in the prewar colonies, including co-operative financial associations in Korea.