In the beginning of 2014, the Financial Services Commission officially announced that it would abolish financial regulations that hinder sound competition in the financial market. In other words, the FSC will leave things up to the invisible hand in the market. Often time, as the government intervenes with economic issues in the market, freedom becomes restricted. Since there are lots of rules to follow, competition thereby decreases. More rules mean actors in the market have more things to consider when making decisions. They become more cautious and sluggish.
Regulations have function of balancing powers in the market. Regulations promote sense of fairness among actors regardless of their status or size. However, the demerit of regulation is that it discourages competition. Competition is required in order for companies to constantly develop and to better the completion of products. According to Neo-liberalism; the most prevalent idealism regarding the market, the more freedom market has, the more it will flourish. Many believe that the market has self-sustaining function. Supply and demands naturally balance one another if no third party is in between. In addition, such function of invisible hand suggests that people who try hardest will receive according incentives in return. Freedom in the market generates fierce competitions and competitions are what make market grow through development.
Up until now, the Korean government was often involved with the flow in the market to protect fairness. Yet, after examining current market condition now is the time for deregulation and boost the market through freedom. From 2014, the FSC will focus in abolishing financial regulations that hinder sound competition. It recognized that competition is what it takes for advancement in the Korean market.
To increase effort, the FSC is planning on having T/F meetings regularly to discuss ways to boost competition. T/F meeting is a meeting composed of public officials and private experts to improve currently existing financial services. Secondly, the FSC will be concentrating on reforming regulations such as Bank account switch service to make more favorable environment for those in the market. Bank account switch service is a service when changing bank accounts, users can make use of the previously existing bank accounts and automatically shift the information into the new bank’s account. It reduces tedious and bothersome identification process users have to go through each time when they need to change accounts.
With all these effort, hopefully Korea’s financial market will regain vitality and take a great leap forward in economic development.