In July 2021, the Tokyo Metropolitan Government announced the revision of the "Global Financial City: Tokyo" Vision (Draft). Ever since the initiative was launched in November 2017, the global financial environment has undergone major changes such as Brexit, changes in the Asian market and the COVID-19 pandemic. In order to respond appropriately to these environmental changes, the revised vision listed the three pillars of its policies: (1) Establishment of a robust financial market that helps solve social issues (i.e., promoting the "Tokyo Green Finance Initiative (TGFI)", a strategic initiative to develop green finance in Tokyo); (2) Digitalization of finace through the utilization of FinTech, etc; and (3) Accumulation of asset managers and other diverse financial players. It was stated that to realizing the “Global Financial City:Tokyo”, leading the world, it would be necessary to expand the above policies through active promotion both inside Japan and abroad.
The Revision of Vision (Draft) first analyzes Tokyo's assets and challenges it must face towards establishing itself as the world's leading financial city. It mentioned that Tokyo’s strengths lie in Japan’s having personal financial assets amounting to 1,900 trillion yen, of which more than half are cash and deposits (54.3% as of the end of March 2021). As a result, Tokyo offers a plethora of potential financial resources to growth sectors and opportunities to fund management companies. It also pointed out that as a city, Tokyo has great merits to its own, located in Japan, the world’s third largest economy (by GDP) where there is no dearth of companies and projects to invest in, is also home of the world’s fourth largest market capitalization of listed stocks, the Tokyo Stock Exchange, and also boasts political stability and high standards of public safety.
Moreover, it stated that Tokyo should aim to become a global financial city of a "real economy backe-type” on par with New York and Shanghai, which, by virtue of their capacity to fulfill the financial demands and supplies that give life to a diversity companies and projects, are financially appealing due to their power to link international capital to domestic and international financial demands. It also considered it important for Tokyo to function in the future as an “Information/knowledge intensive-type,” such as London does, which would render it able to actively introduce new financial products into the market and expand it ahead of the rest of the world.
In order to proceed towards that goal, Tokyo needs to adapt to the global development of green finance, promote the digitalization of finance, and foster the concentration of a variety of finance-related players such as asset management companies.
To take advantage of Tokyo’s financial strengths and respond to the impending challenges, the three pillars of the aforementioned policies have been set forth along with their detailed descriptions.
The first pillar, "Establishment of a robust financial market that helps solve social issues" (Promoting of the TGFI), states that its main efforts will hone in on promoting the expansion of a green finance market by developing an information platform on corporate initiatives related to environmental investment and providing support to green bond issuers. It also refers to the development of measures to support companies with excellent environmental technologies and to raise future leaders of sustainable finance, along with the promotion of pioneering environmental policies by the Tokyo Metropolitan Government and the broadening of the base of financial players through green finance stimulation of small and medium-sized enterprises as well as by attracting individual investors.
The second pillar, "Financial digitalization,” aims at promoting the digitalization of funds intermediaries by attracting and aiding foreign fintech companies to create businesses in Japan, by supporting the growth of Japanese fintech companies, in addition to helping asset management companies to use financial data and promoting joint venues between financial institutions and fintech companies. Furthermore, in order to promote cashless payments in the real economy, it proposed that cashless payments will be advanced within the facilities of the Tokyo Metropolitan Government Building and other facilities used by Tokyo residents, aiming to improve convenience for the residents.
The third pillar, "Concentration of diverse financial players," states that, in order to further attract asset management companies, it is imperative to push forward efforts to develop attractive business and living environments, while creating business opportunities and improving the business foundations that will support the establishment and growth of fund management companies. It will also aim at training experts in finances and improve the financial literacy of Tokyo residents.
There will also be a steeped promotion of this vision as well as of diverse initiatives which form the platform that will guarantee the effectiveness of the efforts led by these three pillars. This is to be achieved through promotional campaigns aimed at domestic and international investors in collaboration with entities such as FinCity.Tokyo, Japan’s first organization promoting public-private financial cooperation, JETRO, and others, as well as by giving support to companies based in Tokyo to share investment information in English with the world.
In order to materialize this vision, it has been decided to carry out collaborative efforts with various key players such as the Japanese Government, FinCity.Tokyo, private companies and other businesses in the financial industry, as well as universities, research institutes, and the City of London.
In order to examine the progress of the vision and to intensify these efforts, the following KPIs have been set for each of the policies’ pillars. First Pillar: Japan's share of the global sustainable investments balance; the amount of green bonds issued in Japan; and survey results on Tokyo citizens' interest in green finance. Second Pillar: the number of fintech companies in Tokyo; and the proportion of cashless payments. Third Pillar: the number of asset management companies and fintech companies in Tokyo; and the effectiveness in boosting Tokyo’s GDP by revitalizing its financial industry through the advancement of the vision.
The Revision of "Global Financial City: Tokyo" Vision (Draft) has been published at the Office of the Governor for Policy Planning website: https://www.seisakukikaku.metro.tokyo.lg.jp/en/pgs/gfct/vision/kousou-kaitei.index.html
Under this vision, the Tokyo Metropolitan Government has launched measures to promote "ESG investments," in which investors will decide whether to invest in companies based on not only on financial information but also on information on the environment, society and governance. Specifically, the ESG Investment Category has been added to the Tokyo Financial Award, in order to attract business operators who are promoting ESG investment. Applications for the ESG Investment Category are open through Tuesday, September 28, 2021, of the current year. More details can be found at the Tokyo Financial Award website.
Tokyo Financial Award website: https://www.finaward.metro.tokyo.lg.jp/en/
Winners will be honored at the awards ceremony to be held in February 2022. (End)