FSC's Deregulation
Policy Hangs Tough

FSC Chairman Jun hangs on deregulation and privatization policies despite U.S. financial turmoil


Jun Kwang-woo, chairman of the Financial Services Commission (FSC), indicated that the government will stick to its deregulation and privatization plans despite the recent turmoil of the U.S. financial market.
The nation's top financial regulator told a breakfast meeting of CEOs of financial institutions at the Lotte Hotel in Seoul on Sept. 22, "Competition and autonomy in the financial industry would be spurred through deregulation reforms."He said the government will get the Capital Market Integration Act ready without a hitch since the act is aimed at spurring the growth of the financial investment industry through completion.
The FSC chief's remarks drew keen attention as financial experts have demanded more stringent financial supervision amid doubts over the U.S. model of neoliberalism.
He said financial firms with systematically less risk will be allowed to compete in the market and unqualified firms will be driven out of competition in the market whereas solid companies will be given the chances to further grow through voluntary consolidation.
The FSC plans to submit 18 revision sand new bills to the National Assembly this year to restructure the financial market and cultivate giant investment banks. Among the deregulation plans are ones to privatize state-run banks, ease the bank ownership cap for non-financial companies and revise the Capital Market Integration Act.
The Korea Development Bank (KDB) will be privatized to help it establish itself into a leading institution of the corporate and investment banking industry as well as to restructure the financial industry, he said. To this end, he said, a relevant revision bill will be submitted to the parliament for approval in October, and the financial regulator will launch details for the establishment of the KDB holding company and Korea Development Fund.
Jun also said he will stick to the FSC's earlier stand of expanding financial institutions'business arenas. "Banks will be allowed to expand into the ordinary derivatives market, while securities and credit card companies will be given a leeway to issue their integrated credit cards."He said 21 financial reform bills will be submitted to the National Assembly as planned, and the FSC will stick to deregulation but with more stringent supervision.
Some critics argue that amidst the demise of giant U.S. investment banks, a benchmarking the U.S. model goes against global financial trends.
However, Jun said, "It is true that the latest financial turmoil necessitates our reexaminination of the financial system, but interpreting it as the demise of neoliberalism or financial liberalism is too extreme." "We cannot jump to conclusions that all traffic accidents might be caused by engine (neoliberalism) failure. Motorists"mistakes (managers'moral hazards) and traffic signal problems (improper supervision mechanisms) and cops (regulators) who fail to control violators are also to blame,"he said. nw

Jun Kwang-woo, chairman of the Financial Services Commission (FSC)