By Lee Hyo-sik
Staff Reporter
The Bank of Korea (BOK) will likely be given authority back to supervise banks and other financial firms, with more lawmakers moving to expand its role from a mere-inflation fighter to a comprehensive market stabilizer.
In a forum organized by the Citizens' Coalition for Economic Justice, Tuesday, Rep. Kim Jong-yull of the main opposition Democratic Party, a key member of the National Assembly's strategy and finance subcommittee, said that the subcommittee will positively discuss the revision of the ``Bank of Korea Law,'' initiated by Rep. Kim Song-sik of the governing Grand National Party (GNP).
``In the aftermath of the global financial market meltdown, there has been a growing call for the central bank to increase its role in stabilizing the financial sector. The Financial Supervisory Service (FSS) has been doing a good job in micro-supervising financial firms. But on the macro-level, its function has been largely limited and ineffective,'' Kim said.
He then stressed the BOK should be given power to oversee financial companies and thus ensure the stability of the entire financial system, particularly during an economic crisis, adding the Assembly should pass the revision during the ongoing plenary session.
His remarks were echoed by Kim, who initiated the motion to revise the law.
``The central bank should be better equipped to handle the ongoing financial market troubles. On top of stabilizing consumer prices, achieving the financial market stability should be BOK's top priority,'' Kim said.
He said the central bank should be empowered to inject liquidity into the non-banking sector at its discretion, as well as supervise financial firms and request the financial regulators to take necessary actions against them.
Both governing and opposition party lawmakers belonging to the subcommittee previously agreed to pass the revision during the extra session in February.
But the speedy passage of the revised bill was hampered as a consensus among government bodies needs to be reached. The FSS is opposing the revision, insisting that if the BOK is given authority to oversee financial institutions, it will put heavier costs on companies and hamper the government plan to further deregulate the financial sector.
Currently, the law states that the central bank's sole policy priority is to curb inflation. When it was revised in 1998, the bank's authority to supervise banks and other financial firms was given to financial regulators ― the FSS and its parent the Financial Supervisory Commission (FSC).
Many within and outside the central bank have argued that the current law is hampering the bank's efforts to tackle financial market jitters and the economic downturn.