BOK: "Major Central Banks' Authority to Oversee Payment Systems Specified in Law"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] Unlike South Korea, major countries' central banks have supervisory authority over payment and settlement systems explicitly stipulated in related laws, according to a recent investigation. This differs from the Bank of Korea Act, where such authority is not legally specified.

On the 16th, the Bank of Korea released a research report titled "Payment and Settlement Systems and Related Legal Frameworks in Major Countries," stating that the United States, the United Kingdom, the European Union (EU), Canada, Australia, and Japan explicitly define responsibilities related to funds settlement operations and supervisory authority over payment and settlement systems in their central bank laws or separate legislation.

The Bank of Korea explained, "With the recent increase in fintech companies and other non-financial institutions entering the payment market, and active research and development of central bank digital currencies (CBDCs) in various countries, rapid changes are occurring in the payment market, making payment-related issues a major agenda."

Currently, the Bank of Korea sets its supervisory authority over payment and settlement systems not through provisions in the Bank of Korea Act but via internal regulations titled "Payment and Settlement System Operation and Management Regulations," enacted under delegation from the Bank of Korea Act. Although evaluations are conducted according to the Bank for International Settlements (BIS) Principles for Financial Market Infrastructures (PFMI), establishing this authority in law would provide clearer legal grounds.

In the past, amendments to the Bank of Korea Act explicitly granting supervisory authority over payment and settlement were proposed in the National Assembly, but due to conflicts with related agencies, these provisions were ultimately not included in the Act.

The recent investigation also mentioned the need for a consultative body on payment and settlement. The Bank of Korea stated, "Similar to Australia and Canada, it is possible to consider establishing a consultative body encompassing various stakeholders to develop payment and settlement development strategies to appropriately respond to the rapidly changing payment environment."

Regarding the establishment of a fintech regulatory framework, it added that it is necessary to clarify the roles of each institution through measures such as signing memorandums of understanding (MOUs) between regulatory agencies.