ABSTRACT
Banking in Japan changed considerably between the beginning and the end of the 1980s. The Yen/Dollar Accord explained much of the shift. In the Euromarket, the Ministry of Finance (MoF) agreed to end all non-prudential limitations on yen lending. The forum provided a ready mechanism for the Treasury to retain a role in the reform process in Japan. As the tone became more shrill, the influence of the United States on the reform process fell. As David Mulford predicted, the Euroyen reforms in the Yen/Dollar Accord rippled back into Japan's financial system, forcing additional changes. Of all of the reforms, one of the most difficult but far reaching proved to be interest rate deregulation. Deregulation of interest rates more than any single reform fractured the system of financial regulation in Japan. The reforms represented an example of “reverse discrimination” and demonstrated the length the MoF would go to satisfy foreign pressure.
