Transfer of Financial Policy to the Ministry of Economy and Finance
Supervision Proposed to Be Handled by an Independent Body
Kim Namgeun, a member of the Democratic Party of Korea, is being interviewed by Asia Economy in his office at the National Assembly Members' Office Building. Photo by Yoon Dongjoo
On July 23, Kim Namgeun, a member of the Democratic Party of Korea, and others held a policy forum on organizational restructuring, arguing that the financial policy functions and financial supervisory functions of the Financial Services Commission should be separated.
Although the National Planning Committee reported an organizational restructuring plan, including the reform of the financial supervisory system, to President Lee Jaemyung on July 3, the restructuring has been delayed. As a result, the need for organizational reform is being emphasized, particularly among academia and civil society.
On this day, 10 lawmakers from the Democratic Party of Korea, the Cho Kuk Innovation Party, the Social Democratic Party, and other pro-government parties, including Kim, held a policy forum on financial supervisory system reform at the Franciscan Education Center in Jung-gu, Seoul, to discuss plans for restructuring the financial supervisory system.
Kim stated, "The current system has a mix of financial industry policy and supervisory functions, and chronic problems of overlapping authority and responsibility avoidance between the Financial Services Commission and the Financial Supervisory Service have persisted. A new financial supervisory system must be established that ensures not only independence from the government but also neutrality from stakeholders."
Ko Dongwon, professor at Sungkyunkwan University Law School, proposed that the financial industry policy function currently handled by the Financial Services Commission should be transferred to the Ministry of Economy and Finance, while the financial supervisory policy function should be assigned to an independent financial supervisory body.
Professor Ko explained, "If the Ministry of Economy and Finance oversees both domestic and international financial policy, it can harmonize with the government's economic policy and improve efficiency. However, this could make the ministry excessively large." He added that separating the budget function from the Ministry of Economy and Finance could be considered as a solution.
Professor Ko also suggested a dual system that would separate the financial supervisory body into a 'Financial Soundness Supervisory Agency' and a 'Financial Market Supervisory Agency.' According to him, if the Financial Soundness Supervisory Agency is responsible for licensing financial institutions and supervising their soundness, and the Financial Market Supervisory Agency is in charge of regulating business conduct and protecting financial consumers, efficiency can be improved and consumer protection strengthened.
Meanwhile, Yoon Sukheon, former Governor of the Financial Supervisory Service and former President of the Korean Finance Association, attended the forum and delivered congratulatory remarks. Presentations were given by Professor Ko Dongwon of Sungkyunkwan University and Jeon Seongin, former professor at Hongik University and former President of the Korean Finance Association. The discussion session, moderated by Choi Heungseok, the first Governor of the Financial Supervisory Service under the Moon Jaein administration, included participants from civic groups, law firms, and academia.
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