choongsoo kim : the past year in retrospect, challenges and resolutions for 2013 new year speech by dr choongsoo kim, governor of the bank of korea, at the bank of korea, seoul, 2 january 2013. * * * dear fellow members of the bank of korea, the dragon year of 2012 has passed and 2013, the year of the snake, is now upon us. as the new year begins, i take it as very meaningful that we all gather to reflect together on the past year and firm up our resolve to undertake what we must in the coming year. it is already almost five years since the global financial crisis struck, yet the fact of the matter is that we still have little clue as to how it may be fully resolved. instead, we may have ourselves become so accustomed to the crisis situation as to even arouse suspicions that we might be becoming gradually desensitized to its seriousness. the current financial crisis is analyzed as originally caused by the side effects of the deepening of global trends, and during the past few years of overcoming the crisis these trends have progressed in ways that have locked in the interconnectedness of all economies of this world even more firmly. we have come to face the irony that our efforts to overcome the various side effects from the rapid progress of global trends have in the end produced an even stronger process of globalization. what this means is that, due to the environment of continuing economic recession the growth of international trade has contracted compared to the past, but the universality of policies and systems has expanded all the more and their interlinkages have been further strengthened. in such an environment, the extent to which a single nation can resolve problems through its own policy tools alone can be said to be growing more and more limited. on the other hand, as the crisis drags on economic agents ’ patience for enduring the social tensions aroused by the reform agendas that had been pursued in several countries around the world is also showing signs of reaching its limits, and in many countries there even appear to be preoccupations with the short - term resolution of outcomes brought about in the course of handling the crisis, rather than concentration on identifying the nature of the crisis or preventing its reoccurrence. corresponding with the changes in global economic conditions, each country has attempted various countermeasures domestically, but their effects in bringing about economic stability and growth while eliminating the uncertainties prevalent in the global economy are considered to have not been

the fss ’ s on - site examination. under the present joint examination system, the fss examines general matters regarding financial institutions ’ managerial soundness. for its part, the bok examines only limited areas related to monetary policy and the payment and settlement system. the two institutions, meanwhile, pool the information that they gather in the course of on - site examination, and draw on it for their respective operations. there is one more issue concerning financial stability and efficiency, although it is not directly related to banking supervision. that is the need for strengthening the central bank ’ s oversight of the national payment and settlement system. the case for this is constantly advocated by multilateral financial institutions such as bis and imf. in this regard, the bok was given the authority to oversee the various payment and settlement systems in korea under the most recent revision of the bank of korea act in september 2003. under the revised legislation, the bok may demand relevant materials from both banks and non - bank financial institutions that take part in bok - wire, the real time gross settlement system operated by the bok. it may also request the improvement of payment and settlement systems operated by other entities. all this means that the bok has come to play many roles in order to secure financial market stability in spite of its limited official powers of financial supervision. 5. concluding remarks let me now indicate a few points that central bankers may wish to bear in mind from our experience following the integration of financial supervisory agencies in contemplating the reorganization of their own national financial supervisory framework. firstly, in the light of other countries ’ example and korea ’ s experience, i do not think there is any one - size - fits - all supervisory system that is the optimal for every country. in particular, i think there are various alternative options regarding the issue of the central bank ’ s supervisory function. these will depend on the degree of financial market development and a nation ’ s traditions related to the division of roles between government and central bank. and i think that it rests with the financial system characteristics of a particular country whether it should go for an integrated financial supervisory body or multiple supervisory agencies for the various types of financial institution. secondly, it is absolutely essential for central banks to obtain a wide range of information on financial markets and the management status of financial institutions whether or not they are responsible for bank supervision. where a separate bank supervisory agency exists, a system of co - operation with it must be built up so that necessary information can be collected