BOK, financial watchdog to beef up joint inspection

SEOUL, Sept. 15 (Yonhap) -- South Korea's central bank and financial watchdog on
Tuesday agreed to beef up joint inspections into the practices of financial firms
in a bid to better cope with possible turmoil and minimize systemic risks.

The preliminary agreement between the Bank of Korea (BOK) and the Financial
Supervisory Service (FSS) says that if the BOK requests a joint inspection after
its monetary policy meeting approves it, the watchdog should launch the
inspection within one month.
In an emergency, such as a financial crisis or drying liquidity, the two bodies
will immediately carry out the inspection, according to the pact.
Currently, before the central bank asks the FSS to launch a joint inspection, the
two institutions must hold a working-level meeting. But the process can be
delayed as there are differences of opinion.
In the aftermath of the global financial meltdown, there have been calls for
expanding information-sharing and strengthening coordination among related
agencies working to stabilize the market.
The agreement comes amid controversy over how to revise the central bank laws to
better deal with financial and economic instability.
The laws regulating the BOK were last revised in 1998. Those revisions made price
stability the central bank's top priority and gave its right to supervise local
banks to the FSS.
But the global financial rout has drawn calls to revise the law to strengthen the
BOK's role in stabilizing the financial market and giving the central bank
limited authority to investigate the practices of local banks.
The finance ministry and the financial watchdog have expressed opposition to such
measures, saying the current supervisory system is not seriously flawed when it
comes to dealing with financial turmoil.
sooyeon@yna.co.kr
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