Kim Jong-chang, governor
of Financial Supervisory Service
By Kim Tae-gyu
High-ranking financial regulators from 27 countries will convene in Seoul today to finalize a broad-based agenda regarding how to monitor banks, which will be reported to the G20 summit slated for next month.
The agenda of the Basel Committee on Banking Supervision (BCBS), generally dubbed Basel III, is an update to the Basel Accords — recommendations on banking laws and regulations.
Korean regulators, however, argue that Basel III is not the appropriate term to cover all the ideas and proposals under development, and instead have suggested the “Seoul Initiative.”
“In the past, the BCBS has mostly dealt with capital adequacy at banks. But the current talks cover a wider range including standards on leverage and liquidity. Various other issues beyond the banking sector will be added for a fresh global financial architecture,” Financial Supervisory Service Governor Kim Jong-chang said in a recent interview with The Korea Times.
“Accordingly, Basel III would not be the proper umbrella to accommodate such a revolutionary paradigm shift. A whole new term such as the ‘Seoul Initiative’ would be the right for all the content.”
The past Basel I and Basel II were mostly about the capital health of lenders — how much capital banks were required to put aside to cover downturns.
The most outstanding example is the Bank for International Settlements (BIS) ratio, which measures the financial soundness of a bank by comparing its capital and risk-weighted assets.
Thus far, 8 percent has been regarded as the minimum requirement by the BIS that has the BCBS under its wing.
“On top of tightened capital adequacy ratio, the BCBS member countries will come up with final proposals to be endorsed in the G20 summit on leverage and liquidity ratios, and a framework for counter-cyclical capital buffers,” Kim said.
“In addition, derivatives and systemically important financial institutions (SIFI) will be on the table. A new framework including such broad topics deserves a new title such as the Seoul Initiative.”
SIFI surfaced in the financial sector in the wake of the unprecedented economic turmoil, which was accelerated by the collapse of Lehman Brothers midway through 2008.
The world’s regulators are thinking of putting heavier requirements on those big financial firms, whose failure is feared to shake the whole system.
Other large-sized financial outfits weighed on the economies of many nations, whose governments were forced to channel large amounts of taxpayers’ money to keep the struggling outfits afloat.
This resulted in concerns that the too-big-to-fail myth may end up generating moral hazards in the financial sector, prompting the BCBS to make proposals aimed at halting such a mindset as well as preventing another financial crisis.
금융감독원장 `바젤III 대신 서울 이니셔티브를’
김종창 금융감독원장은 최근 코리아타임스와의 인터뷰에서 다양한 은행과 시스템적으로 중요한 금융기관(SIFI)의 규제를 담은 바젤 위원회의 안을 바젤III가 아닌 `서울 이니셔티브(Seoul Initiative)’로 불러야 한다고 제안했다.
10월 19일 한국의 주제로 27개국의 금융감독 당국자들이 G20 정상회의에 제출할 어젠다를 결정하기 위해 서울에 모여 논의를 계속한다. 지난달 초 바젤에서 결정된 은행의 자기자본 규제 강화, 유동성과 레버리지 비율에 대해서도 논의를 확정할 예정이다.
김원장은 ``바젤 협약은 주로 은행 자본의 건전성 규제에 관한 내용이다. 하지만이번 모임에서는 자본 건전성 이외에도 유동성과 레버리지 비율이 있고 앞으로는 SIFI와 선물의 결제기관에 대한 논의도 있을 것이다. 이것은 하나의 혁명이다. 바젤III라는 우산으로는 모두 커버할 수 없다. 더 큰 우산이 필요하다. 그래서 서울 이니셔티브를 제안한다”고 했다.
김원장은 최근 바젤 회의에서도 비슷한 제안을 했지만 아직 구체적인 논의가 진전되지는 않은 것으로 알려졌다.