It is less than two weeks left before the presidential election in Korea. So, for today, I would like to check out economic policies suggested by the two leading presidential candidates. Particularly, I am focusing on restructuring of financial supervisory system. Before jumping into the issue, the two leading candidates are; Geun-hye Park from Saenuri party and Jae-in Moon from Democratic United party.
First, what is the common ground shared by both parties? They agreed upon the idea that the Financial Supervisory Service (FSS) should carry out two separate functions. One is prudent financial supervision, while the other is financial consumer protection. To enhance protection for financial consumers, it is expected that the office for financial consumer protection, which is currently FSS-affiliated body, will become an independent department as Financial Consumer Protection bureau.
Then what about the Financial Services Commission (FSC)? Each party suggests a different opinion in this regard. Ms. Park is planing to establish a new financial department by combining the FSC with the international finance bureau at Ministry of Strategy and Finance. According to this reorganization plan, the FSC will cover all the financial matters including both international and domestic policies as well as carry out its financial supervisory function.
On the other hand, the other candidate Mr. Moon has a different idea. He is planning to split the FSC’s functions into two, financial policy and supervision. In accordance with this plan, the FSC will hand over its current responsibility dealing with financial policies to Ministry of Strategy and Finance. Accordingly, the FSC will be only responsible for financial supervisory function. This idea is to strengthen an independence of supervisory function. However, it is feared that the Ministry of Strategy and Finance’s power would become too over-expanded compared to other government entities.
For more clear-cut understanding, please refer to the diagrams below. And, lastly, don’t forget to vote!