ED 'Big Brother' legislation
Central bank, financial regulator should take step back
The Bank of Korea (BOK) and the Financial Services Commission (FSC) are locking horns with each other over the latter's plan to control the country's settlement payment system involving big-tech companies, such as Naver and Kakao. “It was a misconception for the BOK called the revision to the Electronic Financial Transaction Act a Big Brother law,” FSC Chairman Eun Sung-soo said last Friday. “We are a little upset.”
The FSC head was responding to a BOK statement issued a few days earlier, in which the central bank described the revision bill as a “Big Brother law” that could be used for consumer surveillance. It was rather unusual for the BOK, which usually uses ambiguous language, to express its opposition in such a strong tone. That shows the central bank is angry, too. The amendment seeks to introduce the electronic payment settlement business and calls for those wanting to engage in it to win the approval and permission of the FSC. Considering that financial settlement has long been within the remit of the central bank, it appears that the FSC is infringing on the BOK's domain.
However, the BOK should acknowledge that digital finance led by big-tech firms is an irreversible trend. The present Electronic Financial Transactions Act legislated 15 years ago is outdated. The FSC says the amendment aims to keep the records of financial transactions so that consumers can retrieve their money more easily when financial mishaps occur. That explains why the central bank should cooperate in pushing for the revision bill, at least in areas related to consumer protection.
The FSC should also ask itself whether it must have the right to approve and permit participants in the newly introduced business. The BOK says it is not a turf war but an issue related to the central bank's own responsibility and function. That makes sense. The commission needs to consider giving the right to permit, approve and supervise the new business to the central bank while playing some role within the framework. Both sides should take a step back and seek a compromise.