[News Analysis] Financial Supervisory Committee still sees centralized power

　

The impetus for the 1998 formation of the Financial Supervisory Committee was to decentralize the authority that had become concentrated in MOFA. With the move, the possibility was large that the secondary objective of MOFA, financial integrity, would be sacrificed in order to accomplish their primary objective, sound economic policy. In fact, this sacrifice is viewed as being a primary cause of the 1997 Financial Crisis in Korea.

However, the executive office of the Financial Supervisory Committee was almost completely staffed by former officials from MOFE's Financial Policy Department, and thus many pointed out that the reforms only strengthened the hand of the Mofia.

The MOFE Financial Policy Department and Financial Supervisory Committee's swift mutual agreement to recent controversially low-priced sales of foreign exchange banks is an extreme example of the limited effects of this attempted power redistribution.

According to Kim Dae-sik, economics professor at Hanyang University, "financial supervisory organizations must be reformed so as to have an independence similar to that of the Bank of Korea."

He continued, "MOFE should hold the legal right to secondary proposals, and there should be a set of mutual checks so that the Financial Supervisory Committee and the Financial Supervisory Service cannot overstep the bounds of their authority.

Another subject of pressing concern is the importance of creating laws and institutions such that financial officials cannot interfere arbitrarily on a whim. Furthermore, in situations such as the recent LG Card and Korea Exchange Bank crises, there must be a set of appropriate legal institutions and procedures such that MOFE may be allowed to intercede.

Lee Oui-yung, sub-chairman of the Permanent Enforcement Committee at the Citizen's Coalition for Economic Justice, said, "Many elements of the financial institutions in our country are quite vague, and there is a tendency for economic officials to interpret them on their own caprice. As the system is not properly structured, all that one can do is to befriend those whose job is to interpret it."

There are also suggestions that the personnel recruitment system of the executive office of the Financial Supervisory Committee and the Financial Supervisory Service be diversified as well. In particular, voices calling for the appointment of a figure from outside of MOFE to be the next chairman of the Financial Supervisory Committee are steadily growing louder.