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| FSS Governor Yoon Suk-heun answers a question during a press conference held at the government agency's headquarters on Yeouido, Seoul, Tuesday. / Yonhap |
By Kim Yoo-chul
New Financial Supervisory Services (FSS) Governor Yoon Suk-heun has stated the financial regulator "should have independence" in performing its role of hedging risks, with checks and balances in between the domestic financial industry and financial market.
"The FSS should remain independent from external influence or forces in order to perform things related to the inspection of the affairs of financial institutions, inspections and policies. These are the given roles the FSS has to meet as the financial regulator," Yoon said during a speech after he took the top seat as FSS governor, Tuesday.
The new FSS governor, a former Seoul National University visiting professor known as an activist, believes that local financial markets will stabilize following greater clarity in regulation. This stability, according to the governor, would allow industries to create more services and products. In turn, this will allow the entire financial market to expand.
"The FSS is the body to apply pre-emptive measures, if necessary. Any inspection should act as a hedge against the potential risk of country-initiated policies. Any stern measures are needed in dealing with risks that were already materialized," Yoon said.
The governor, whose nomination by the Financial Services Commission (FSC) was authorized by President Moon Jae-in, also added the FSS would consider how best to leverage progress made in agreeing and implementing standards and enhancing cooperation with other relevant government agencies to protect consumers.
He said the FSS would openly collaborate with the FSC, and the two have different configurations coated with different scopes.
But the FSC directs the FSS as well as inspecting policies, while the FSS examines and supervises financial institutions under FSC oversight.
When questioned about the specifics of "independence," which he stressed during the speech, the new governor declined to elaborate. Instead, Yoon acknowledged several areas that need attention, repeatedly asking the government to separate the FSS from the FSC, allowing the FSC to be only in charge of handling financial policies, letting the FSS handle inspections on institutions.
The FSS has long served as a "back-office" of the FSC, as the FSC takes the role of checking and monitoring policies implemented by the FSS, which has long been cited as hurting the FSS' independency.
Regarding cryptocurrencies, although the initial guidelines were rather harsh as Korea still has a ban on initial coin offerings (ICOs) and mandates identification verification in crypto trading, the new governor seems to embrace a more lenient approach.
In response to a question about the possibility of softening stiff cryptocurrency regulations, the new governor said, "When you see ups and downs of the prices of cryptocurrencies, then it's understandable that cryptocurrencies are not currencies, but it's hard to agree with opinions that cryptocurrencies are not financial assets."
This is an apparent signal that the FSS is looking to ease crypto-trading regulation. The remarks came at a very interesting time for the industry as the prices of leading cryptocurrencies such as bitcoin and Ripple were showing signs of recovery.
"The government should make it clear what needs to be regulated and what things need to be lifted. Once these plans are implemented, then the market will be stabilized as cryptocurrencies will become less speculative," the governor said, adding the FSS will announce updates on cryptocurrency regulations once the regulator reaches a consensus.
Korea is the world's third-largest cryptocurrency market, after the United States and Japan. With local trading platforms generating a large volume or transactions for most top currencies, the regulatory aspect is taking center stage.
