金融監督의 理想과 課題: 金融監督機構의 獨立性과 責任性確保 = The Goal and Task of Banking Regulation and Supervision

다국어 초록 (Multilingual Abstract)

Bank regulators and supervisors should have a substantial degree of
independence both from the government and the industry in order to fulfill their
mandate and contribute to the achievement and preservation of financial stability.
In addition, considering the significant role of banking supervision, proper
channels of accountability should be established to complement agency
independence and make it work.
Recently two factors have served to emphasize on the importance of
regulatory and supervisory independence (RSI). First, in almost all of the systemic
financial crises of the 1990s, either weak and ineffective regulations or regulatory
forbearances, largely due to the political interferences in the supervisory process,
have been referred as major factors contributing to the weakening of the banks,
postponing recognition of the significance of the crisis, and delaying official and
effective intervention. Secondly, the discussion of the most appropriate regulatory
and supervisory structure, including the organizational structure of banking
supervision inside or outside the central bank, has highlighted the importance of
RSI. The growing tendency of unified financial sector supervision often involves
removing the banking supervision function from the central bank, where it had
previously enjoyed a relatively high degree of independence regarding its
monetary policy functions. This was also the case in Korea after the IMF bailout
金容載/ 金融監督의 理想과 課題: 金融監督機構의 獨立性과 責任性確保115
The Korean Journal of Financial Law, Vol. 1, No. 2 (2004)
The Goal and Task of Banking Regulation and Supervision
Yongjae Kim
of 1997.
Korea prior to the 1997 crisis is a representative example of the effects that
a lack of independence can have on banking supervision. Commercial banks
were under the direct authority of the monetary board (the governing body of the
Bank of Korea) and the Office of Banking Supervision. Specialized banks and
nonbank financial institutions were under the direct authority of the Ministry of
Finance and Economy (MOFE). The MOFE’s supervision of nonbanks was
generally recognized as so weak and created conditions for regulatory arbitrage
and excessive risk-taking, especially among merchant banks, which was a
contributing factor to the 1997 crisis. Furthermore, the supervisors had the
authority to waive regulatory requirements, which led to widespread forbearance
and which made enforcement nontransparent. In recognition of the weakness of
supervision, Korea has reformed its supervisory system to provide it with more
autonomy and to eliminate the regulatory and supervisory gaps. However, the
reform has proven to be a failure because it does not give any RSI to a new
financial supervisor, especially to the Financial Supervisory Service (FSS).
This paper aims at searching for any alternatives to the current financial
supervisory system which ensures RSI for the FSS. RSI is the goal and task of
banking regulation and supervision, thus continuously attaining financial stability in
Korea.