Lawmakers agree on BOK inspection right

The National Assembly is poised to settle the long-standing dispute over whether to provide the nation’s central bank with independent authority to inspect financial companies.

Ruling and opposition lawmakers have reportedly reached a consensus to pass the proposed revision of the law on the Bank of Korea as early as this month, according to the political sector.

The revised bill has been pending at the legislation and judiciary committee of the National Assembly since February 2010.

Under the legislative move, local and foreign financial companies in Korea are expected to be subject to a “dual probe” from the Financial Supervisory Service and the BOK.

The issue involving revision of the BOK law has come to the fore again since the FSS, the nation’s financial watchdog, came under public criticism for failure in its supervision of ailing savings banks and corruption scandals of regulatory officials.

A group of economists support the move, stressing the necessity of preventing the FSS from abusing monopolistic power.

They also said the BOK could secure stability in the foreign exchange market by closely inquiring into the possible irregular currency trading of banks.

Over the past few years, the central bank has been entitled to inspect financial companies only in coordination with regulators.

But unionized workers in the financial market expressed anxiety over the coming dual-inspection system.

On Friday, the Korean Financial Industry Union said in a statement that the dual probe could bring about side-effects, including a struggle for regulatory power between the FSS and the BOK.

“Though unionized workers in the financial market the FSS should be held accountable, more responsibility lies in the Financial Services Commission, which controls the FSS as the decision-maker,” it said.

The union also claimed that the coming authority for the BOK would be linked to the government’s intervention in the market. “The central bank’s independence has already come under suspicion,” it said.

Since the first quarter of the year, BOK Gov. Kim Choong-soo has expressed determination to achieve the independent supervisory right.

He has cited cases in major advanced countries where central banks have already been offered the authority.

FSC Chairman Kim Seok-dong has opposed the move, however. “It is undesirable for the nation to offer independent investigative authority to any agency,” he said.

By Kim Yon-se (kys@heraldcorp.com)