Financial Administration System Faces Reshuffle

An organizational review has begun on four government agencies – the Strategy and Finance Ministry, the Financial Services Commission, the Financial Supervisory Service, and the Bank of Korea.

The review constitutes the government’s bid to consider a reshuffle of the financial supervision and policy system in connection with the controversy over a proposed revision to the Bank of Korea Act.

Financial industry sources yesterday said the Public Administration and Security Ministry’s administrative review center requested Seoul National University’s School of Public Administration to study the “rationalization” of the national system for implementation of financial operations, and began a review of the financial administration system.

The review team visited the Bank of Korea and gathered opinions on problems with the system for financial company supervision. A review of the Financial Services Commission and the Financial Supervisory Service will come next week.

A professor of the team said, “The financial supervision system, which was reshuffled following the inauguration of the Lee Myung-bak administration, got off a shaky start, and has shown weaknesses in the course of countering the global financial crisis.”

“We will comprehensively examine precedents in other countries and come up with an appropriate alternative.”

The team before July plans to seek solutions to issues such as the merger of the two financial watchdogs or dual appointment of their chiefs; separation of roles for international financial policy and domestic financial policy between the Strategy and Finance Ministry and the commission; and the expansion of the central bank’s authority over financial company supervision.

jaeyuna@donga.com