The Japanese government has agreed to a sweeping reform package designed to revitalise the country's financial markets, including eliminating the firewalls that keep a strict division between banks and securities companies.

The measures unveiled by the Financial Services Agency on Friday constitute the most comprehensive programme of financial sector reforms since Japan's Big Bang financial deregulation in 1996. The latest effort to boost the country's financial competitiveness comes amid concern that Tokyo, capital of the world's second-largest economy, is losing out to other regional financial centres due to problems ranging from outdated rules to high taxes.