Japan's modern banking system, particularly its payment networks, has been largely overlooked in the extensive literature on banking history. While existing studies focus on individual banks, institutional structures, and brief historical periods, few have systematically analyzed the development of Japan's correspondent banking network at both central and local levels. This study examines the evolution of Japan’s correspondent banking network from 1880 to 1990, exploring its origins, persistence, and transformations within a global context. It identifies four distinct phases of transformation: (1) 1880–1931, when the half-government-owned Yokohama Specie Bank (YSB) and three zaibatsu-related banks dominated international transactions; (2) 1931–1945, during which YSB’s operations expanded in parallel with Japan’s military expansion in Asia; (3) 1945–1970, when the Bank of Tokyo played a central role in foreign exchange under strict currency controls; and (4) 1970–1990, characterized by the liberalization of financial activities and the rapid expansion of Japan’s correspondent banking networks. The paper also contrasts Japan's banking network with that of China, which developed through a markedly different trajectory. From 1880 to 1950, China’s modern banks relied on correspondent networks with foreign banks rather than establishing domestic branch networks like their Japanese counterparts. This network contracted significantly during the Cultural Revolution but expanded again during the economic liberalization of the 1990s. These differences in payment systems reflect the distinct commercial needs of China compared to Japan, whose system evolved within a more oligarchical structure.
Mariko Hatase is Professor in the Research Division of the Economic Institutions and Policy, Hitotsubashi University, Japan. Mariko is an economic historian specializing in the economic history of Japan and the history of international finance. Her research explores the formation and effects of economic and monetary policies in both pre-war and post-war Japan, as well as the role of international financial markets in historical perspective. Previously, she was a researcher at the Institute for Monetary and Economic Studies at the Bank of Japan, where she conducted empirical studies on Japan’s economic and monetary policies, foreign exchange policy, and the broader functions of international financial markets. Her current research projects include examining investment promotion policies during Japan’s high-growth period, the evolution of macroeconomic policy in the post-Bretton Woods era, and the policy formation process of foreign exchange and monetary policy in pre-war Japan. She is also contributing to an international project led by the BIS, working to compile historical data sets relevant to monetary policy.
Nora Yitong Qiu is Lecturer/Assistant Professor at the Department of History, University College London. Nora is a historian of modern East Asia, specializing in the period from 1600 to 2000. Her research examines China’s modernity and economic disparities through the lenses of identity, finance, and legal institutions, employing both quantitative and qualitative methodologies. Before joining UCL, she was a postdoctoral research associate with the Glocobank project. She is currently a member of the associate faculty and is responsible for delivering the East Asia package, through four papers. Firstly, she is investigating the origins of China’s modern financial system, tracing its historical development and institutional foundations. Secondly, she is co-authoring a case study with Catherine Schenk on a Hong Kong bank’s correspondent business strategy during the turbulent years of 1950–1970, a period shaped by U.S. sanctions and geopolitical uncertainty. Thirdly, she is collaborating with Mariko and Catherine on a study of Japan’s correspondent banking history in the 20th century, examining the evolution of international financial linkages. Fourthly, she is researching the correspondent banking networks of mainland China during the Republican period, shedding light on their role in shaping the country’s financial landscape.
Catherine R. Schenk FRHS, AcSS, FRSA is the Professor of Economic and Social History at University of Oxford and fellow of St. Hilda's College. She has held posts in Wellington, New Zealand, Royal Holloway University of London and University of Glasgow. She has also been visiting professor at University of Hong Kong, Nankai University Tianjin and visiting research fellow at the International Monetary Fund, the Bank for International Settlements and the Bank of England. She is a fellow of the CEPR. Her research is focused on international money and banking and she is Principal Investigator for the ERC-funded project, GloCoBank, Global Correspondent Banking 1870-2000.
