Central bank may be given right to inspect financial companies
The nation’s financial market is focusing on the growing possibility that a proposed revision of the law on the Bank of Korea could pass the National Assembly this year.
If the law on the BOK is revised, the central bank ― like the Financial Supervisory Service ― will be entitled to conduct independent inspections into financial companies.
The possibility is gaining momentum as more and more lawmakers from both ruling and opposition parties are reportedly calling for their colleagues to pass the proposed revision during the provisional session of the Assembly in June.
In particular, in the wake of the corruption scandals involving financial regulators and savings banks, lawmakers opposing the dual probe system ― by the BOK as well as the FSS ― seem to be losing ground.
Among the lawmakers supporting the revision are Rep. Lee Hye-hoon of the ruling Grand National Party and Rep. Park Young-sun of the main opposition Democratic Party.
“It is important to break the monopolistic inquiry system held by the FSS,” Lee said in an interview with a radio news program.
Park said the revision should be passed during the June Assembly session, citing dubious relations between several former and incumbent FSS staffers and the savings banking industry.
Rep. Seo Byung-soo of the GNP pointed out the revised bill has been pending at the legislation and judiciary committee of the National Assembly for the past 16 months.
BOK Governor Kim Choong-soo had already expressed his strong willingness to achieve the independent supervisory rights.
“Korea’s central bank could fail to establish effective networks with its counterparts worldwide if it is not given the independent supervisory right,” he said in March.
The BOK chief stressed that there are only three countries ― Korea, Japan and Canada ― whose central banks’ only take on the role of monetary policies.
“In other countries, the central bank, finance ministry and regulatory body generally consult together for market stability policies (including taking preemptive measures against financial crises).”
Meanwhile, last Monday, Financial Services Commission Chairman Kim Seok-dong said it is undesirable for the nation to offer independent investigative authority to any agency demanding the right.
The BOK is currently allowed to probe financial companies in coordination with the FSS.
Formerly, the BOK had to seek consent from the FSS for co-investigation of financial firms. But since 2009, the regulator has had to accept the central bank’s proposal in all cases.
By Kim Yon-se (firstname.lastname@example.org