Published: August 20, 2026 / Updated undefined ago
How Tokyo is reasserting itself as a global financial center
As one of the world’s largest cities, Tokyo has long been a center for global commerce and finance. It is now building up its resilience and flexibility in a bid to become Asia’s most business-friendly hub.
In July, Japan announced a breakthrough in its project to build a record-breaking 505km/h train line between Tokyo and Nagoya, the first stage of the eventual Tokyo–Osaka line, after Shizuoka Prefecture and JR Central agreed to begin construction on the last unbuilt section of that route. Having been on the drawing board for many years, the ambitious Chūō Shinkansen maglev line can now go ahead.
A month earlier, the government had set out a $2.3tn public and private sector investment plan running to 2040 across 17 strategic sectors.
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The sense of an economy going places has been bolstered by the fact that, in recent years, the Bank of Japan has won a decades-long battle with deflation. Tourism arrivals are growing strongly and even the number of births in Tokyo is rising again for the first time in a decade.
All this contributes to a firmer environment for business and is prompting a renewed focus on the growth potential of Japanese companies, as well as the opportunities for international investors to get involved. The yen may be at its weakest against the dollar for decades, making energy and food imports more expensive, but that also makes Japan a more attractive destination for outside investors.
Corporate and regulatory reforms are making it easier to tap into that potential too. The Tokyo Metropolitan Government has lobbied the national government to make it easier to do business, by relaxing tax conditions and streamlining investment procedures. Reforms introduced this year, for example, ease the rules that let a broader range of foreign investors invest in Japan through domestic investment funds without being deemed to have a taxable permanent establishment there for income such as dividends, interest, real estate income, and capital gains[1].
The city has also launched the Tokyo One-Stop Business Establishment Center, providing English-language support for overseas investors, asset managers and others setting up operations in Tokyo.
The city authorities are also working with FinCity Tokyo to nurture emerging asset managers through the Emerging Managers Program, which serves as a bridge between asset managers and institutional investors in Japan and abroad.
“I want investors and asset managers to focus on investing in growth areas and creating value, rather than spending time dealing with regulations and paperwork,” said Tokyo Governor Yuriko Koike, speaking at a FinCity Tokyo event in New York in mid-July. “I want to make Tokyo Asia’s most business-friendly asset management hub.”
The New York event brought together around 170 participants from financial institutions, asset management firms, family offices, and AI-related companies, with the discussions revolving around Tokyo’s unique strengths and opportunities as a finance hub, particularly for the asset management industry.
It will be followed by another event in New York in October, which will feature speakers from, among others, Japan’s Government Pension Investment Fund (GPIF) – the largest retirement pot in the world, with some $1.8 trillion in assets. The Japanese government is encouraging GPIF and other local pension funds to put more of their money into domestic assets.
Building resilience
Koike has a good base to work with in her ambition to make her city a leader in asset management. Tokyo already has a high concentration of financial institutions, universities and research organizations, technology companies and startups, and there is a mature investment ecosystem that links them to growth capital.
New investment opportunities are also emerging in areas such as artificial intelligence (AI), digital infrastructure, green transformation (GX) and sustainable finance.
Such areas are a natural fit with the agenda that Koike has been pursuing since becoming governor in August 2016. During that time, she has tried to make her city more resilient and adaptable – in matters ranging from environmental and climate change issues to the startup scene.
“Tokyo is a city where one of the world’s largest urban economies, innovation and finance interconnect in a safe, secure and clean urban infrastructure,” she said. “Our goal is to create a sustainable and resilient city where talent can gather, grow, and continue to take on new challenges.”
The ability of Tokyo to draw in international interest is clear from the success of Sustainable High City Tech, known as SusHi Tech, Asia’s largest innovation conference. Almost 800 startups and over 60,000 people from 103 countries and regions participated in this year’s edition in April. Among the attendees were 580 venture capitalists and active global investors.
Tokyo Innovation Base (TIB), which was set up in May 2024 in the central Chiyoda district to support startups, has also welcomed more than 450,000 domestic and international visitors to date, and hosts daily events that aim to inspire entrepreneurs.
There are ambitions to do far more. At a TIB event last year, the city’s Vice Governor Manabu Miyasaka said, “Tokyo will achieve three ‘10 times’ goals: 10 times more startups, 10 times more global unicorns and 10 times more public-private collaborations,” reiterating the 10x10x10 Innovation Vision first introduced as part of the Tokyo Metropolitan Government’s startup strategy in 2022.
This year’s SusHi Tech event focused on areas such as AI, robotics, resilience and entertainment as areas where innovations are set to drive major transformations in daily life in the future. But the extent of Tokyo’s startup scene is far broader and also covers everything from life sciences to nuclear fusion, the space industry, and agritech.
The latest StartupBlink Global Startup Ecosystem Index ranked Tokyo as the 13th strongest city globally, its highest ever position and putting it ahead of Mumbai and US cities like Austin and Seattle.
The Japanese capital’s authorities want to encourage more. This year, the city will start providing support both before and after a startup’s IPO, via a public-private crossover fund which aims to boost the value of promising young companies.
Underpinning much of this is heavy investment in sustainability. Like other global financial hubs, Tokyo is having to come to terms with increasingly intense heat waves and floods caused by climate change, while also grappling with surging demand for power from AI data centres and rising geopolitical threats to global trade.
Koike, a former Minister of Environment in the national government, takes this agenda seriously. “Ever since I took office as governor, I have been working to make our city more sustainable and disaster-resilient by taking a comprehensive approach that integrates environmental, economic and financial considerations,” she told the audience in New York.
Those efforts mean Tokyo is now far better placed than in the past. Flood damage costs have been reduced by half, while more homes are quake-resistant and there is an ongoing rollout of solar power – including thin, lightweight and flexible ‘air solar’ panels which can be installed on walls or even windows. Such measures should help the city reach a target of net-zero greenhouse gas emissions by 2050.
Tokyo's history as a financial centre has helped with some of this. The city has issued the world’s first internationally certified resilience bond and in the current fiscal year, it is due to issue $630 million of Tokyo Resilience Bonds. “We have been building a framework that harnesses the power of finance to support urban resilience and growth,” says Koike.
People power
The governor said resilience and flexibility are among the city’s core strengths, along with its technological capabilities, its financial prowess and deeply embedded principals of democracy, rule of law, and freedom of speech. But she added that “the true driving force behind Tokyo's dynamism is its people.”
That is fitting for one of the world’s megacities. According to the UN, The Greater Tokyo metropolitan area, with around 33 million residents, is the world's third-largest urban agglomeration.
It is also one of the world’s ten leading financial centres, according to the Global Financial Centres Index (GFCI) published by UK-based Z/Yen[2]. That index puts it in the top five globally in terms of banking (where it outpaces Singapore), trading (where it is ahead of London and Hong Kong) and, human capital (above Dubai, Shanghai and others).
Perhaps more importantly, the GFCI also lists the Japanese capital as one of the top 15 global commercial hubs that is expected to grow in significance in the coming years.
By advancing both the development of talent and the attraction of international businesses and capital, as well as enhancing its underlying resilience, Tokyo is becoming a city where global finance industry professionals can gather, grow, and take on new challenges.
“The world now faces increasing uncertainty. That is exactly why Tokyo, with its combination of resilience and potential for growth, offers a wealth of possibilities,” said Koike.
As it continues to develop and grow, one issue it faces is that, for some at least, its international reputation has yet to catch up with the current reality. In the past, Tokyo was known as a place of high taxes, with few international schools for expatriate children, and where language was often the greatest barrier to getting on. But more international schools are being set up, tax burdens are being reduced, and English-language support is becoming more prevalent.
“Tokyo now is quite different,” said Koike. “Compared to ten years ago when I started out as governor, the image of business in Tokyo has changed tremendously.”
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