This paper aims to study the relation between financial reconstruction of local governments and decentralization, in connection with recent broader−based administration. Yubari City, Hokkaido failed finance since last year, and shifted to the financial reconstruction since April, 2007 as is well known. A serious crisis of the local finance was made ahead, and six local groups proposed the fiscal reform including the reform of intergovernmental relations.. At the age of Heisei in Japan, the amalgamation policy of the municipality was advanced aiming at the efficiency improvement of the local finance. In addition the regional system as the broader−based local
government (Do−shu−sei) begins to be discussed. We are going to examine whether the amalgamation of municipalities and the regional system scheduled in the future can promote the decentralization process of the local administration and finance. I describe in this thesis that a careful examination such as the broader−based local governments between prefectures will be
necessary for the promotion of regional system.