BOK Monetary Policy Committee Opposes Amendment to Electronic Financial Transactions Act... "In-depth Discussion Needed"

After Meeting of 5 BOK Monetary Policy Committee Members... "Financial Investment Services Act Should Be Temporarily Deferred"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The Financial Monetary Policy Committee of the Bank of Korea has expressed opposition to the Financial Services Commission's amendment bill to the Electronic Financial Transactions Act.

On the 23rd, the Monetary Policy Committee stated in a position paper, "It is necessary to examine whether the instability inherent in internal transactions could be transferred to the payment and settlement system, thereby undermining the safety of the payment and settlement system."

It further pointed out, "Concerns have been raised about the impact of certain provisions included in the amendment bill to the Electronic Financial Transactions Act (specifically the part concerning electronic payment transaction clearing institutions) on the central bank's payment and settlement system operations." It added, "By adding processes different from the current payment and settlement system, operational complexity increases," and recommended, "The relevant part of the bill should be put on hold for now."

The amendment bill, which requires the Korea Financial Telecommunications and Clearings Institute to collect internal transactions of big tech companies and the Financial Services Commission to manage and supervise them, could undermine the stability of the payment and settlement system.

The Monetary Policy Committee advised, "The relevant part of the bill should be put on hold for now, and the related authorities, as well as academia and experts, need to seek measures based on in-depth review."

Governor Lee Ju-yeol also responded on the same day when Rep. Park Hyung-soo of the People Power Party asked about the purpose and intent of the Electronic Financial Transactions Act amendment, saying, "The criticism that the Bank of Korea Act and the Electronic Financial Transactions Act conflict is correct," and added, "The currently proposed Electronic Financial Transactions Act means that the central bank inevitably has to back up clearing operations for payment and settlement, which is a systemic nature of the system."

He continued, "The Monetary Policy Committee sets risk management standards and comprehensively manages liquidity when payment defaults occur, but under the current Electronic Financial Transactions Act, these authorities would be held by the Financial Services Commission," adding, "The amendment to the Electronic Financial Transactions Act is indeed a Big Brother law," and criticized, "Forcing information to be gathered in one place itself is Big Brother."

Meanwhile, according to the Bank of Korea, this position paper was drafted recently through meetings by five of the seven Monetary Policy Committee members, excluding the ex officio Governor and Deputy Governor of the Bank of Korea.