Korea Seeks Investor-Friendly Financial Regulatory System
KoreaTimes - Wednesday, June 17 2008 http://www.koreatimes.co.kr/www/news/nation/2008/06/123_26054.html Deputy Governor of Financial Supervisory Service It is interesting to note that in today's marketplace, analysis of companies traded on the New York Stock Exchange is disseminated in real time by analysts in Mumbai, India, and stock prices react instantaneously around the world. A newspaper company in California can also hire a reporter in a far-flung place to gather U.S. news on the Internet for Californian readers. The world is becoming a local market at a pace unimaginable just a few years ago. This is especially true for financial markets, where the forces of liberalization and globalization have brought trading and investing in just about every market in every continent within easy reach. So, the axiom that global issues require global responses rings more true than ever before. The 8th ASEM Finance Ministers' Meeting that Korea hosts in Jeju is a good occasion to take stock of economic and financial market situations in the Asian and European countries and discuss wide-ranging regional issues. As countries seek to develop their financial markets, we are seeing an unprecedented level of cooperation among countries. But, at the same time, competition among countries has grown increasingly intense. It can be said that cooperation and competition truly go hand in hand. To survive in the highly competitive global marketplace, we have steadily carried out reform efforts and achieved significant improvements in the profitability, efficiency and soundness of the financial industry. However, there is still much to be done. Inefficiencies remain in the financial system and we see many improvements to be made to our regulatory framework. We would also like to see our financial markets and firms become more global. Let me briefly outline some of our key initiatives. First and foremost, deregulation is at the core of our reform efforts. Our goal is to strengthen the competitiveness of our financial industry and give financial firms the freedom they need to innovate and compete. We are also looking at principles-based supervision where financial firms are given greater flexibility in choosing how to meet their regulatory responsibilities. Moreover, as part of efforts to create a market-friendly regulatory environment, we are sharing our expertise with financial firms and making recommendations to address weaknesses that our examiners identify. We are also preparing a comprehensive online system to enhance convenience and provide easier access to our services. Secondly, we are reviewing our financial regulations and bringing them in line with prevailing global standards. We will create an attractive business and investment climate where domestic and foreign firms can compete freely on a level playing field. Thirdly, as we proceed with financial deregulation, we will step up monitoring to ensure that stability of the financial system and the soundness of financial firms are not harmed. We are implementing a risk-based supervisory approach and encouraging financial firms to set the right risk tolerance levels and conduct their business within those risk parameters. We are also insisting on a sound system of internal controls and safeguards from them. The heavy losses that major investment banks and others have suffered lately in the sub prime market can be traced to failures in internal controls and risk management. Lastly, we will strengthen cooperation with the financial regulators and international regulatory organizations. We are fully committed to supporting domestic firms that are looking to expand into international markets. The 8th ASEM Finance Ministers' Meeting is a unique opportunity for Asian and European policymakers to engage in earnest dialogue on ways to advance our common economic interests
