Financial Regulatory Reform after the Global Financial Crisis: Overseas Case and their Implication
Authors:   Asia-Europe Perspective Association, Lee Hyeong-Ki 
Published: June 2018

Since the global crisis, discussions about renovation of financial regulatory system and restructuring of supervisory systems have gradually in place. However, while discussions on a comprehensive revision for overall financial regulatory system are vigorously unfolding in England, U.S.A. ,etc., the scope of discussions for revision in Korea has been limited to the re cent revision of the law of the Bank of Korea and improvements in information sharing and cooperated inspection between financial authorities. This is because Korea is relatively safe from the financial crisis and so the situation is not as serious as it is in England or U.S.A. Nevertheless, Korea already established a consolidated financial supervisory system ten years ago and thus its supervisory system, along with that of England, is one-step ahead of the system of U.S.A. as far a the supervisory system is concerned. Nonetheless, a fundamental establishment of supervisory system for each function is still lessthan satisfactory yet, and a role re-establishment of Financial Service Commission and Financial Supervisory Service, a role sharing of the Bank of Korea and Financial Supervisory Service regarding financial stability also remain to be implemented. In the course of the recent financial crisis, it has been found that the twin-peaks model which guarantees by policy the central bank’s supervisory function for macro-prudence is more effective in preventing and coping with the system risk compared with the consolidated supervisory organization model. The fact that the central bank’s role of financial stability as a supervisor of macro-prudence is greatly emphasized compared with the pre-crisis period is observed in renovation plans of both England and U.S.A.
In order to aggressively cope with the possibility of recurrence of a financial crisis in the future, a more comprehensive discussion about revision of the financial supervisory system is necessary by way of a clear and open discussion process as in England and U.S.A. Specifically, an open discussion for the selection of supervisory model and a ‘general agreement of terms’ with regard to the introduction of macro-prudence supervision need to be signed in order to facilitate cooperation and check between the Bank of Korea and Financial Supervisory Service. A clear re-establishment of roles and relationship between the two institutes is also needed. The fact that the information and inspection results of supervisory organizations for micro-prudence in the renovation plans for English and U.S. financial regulatory systems and the fact that the both countries are allowing the central banks’ roles and right for the maintenance of stability of payment system should also be discussed fully during the discussion on Korea’s financial regulatory system.
To improve international competitiveness through a balanced harmony between efficiency and prudence of Korean financial industry, a well-balanced harmony between micro-prudence supervision and macro-prudence supervision is most important. Micro-prudence supervision not supported by macro-prudence supervision could hardly achive the effectiveness, and macro-prudence supervision not complemented by micro-prudence supervision is helpless as well. In this respect, the renovational plans for financial regulatory systems in England and U.S.A. have a great implication in that they maximize the advantages of the current consolidated supervisory organization and can strongly play a role as a true ‘system risk supervisory organization’.