FSS to renovate supervisory framework to earn trust from global financial markets

Financial Supervisory Service (FSS) Governor Lee Bok-hyun speaks during the FSS SPEAKS 2023 held at the Federation of Korean Industries (FKI) Tower Conference Center in Seoul, Thursday. Courtesy of FSS

Financial regulator strengthens communication with foreign financial firms

By Anna J. Park

In a move to foster effective communications with foreign financial companies as a more trusted regulator, the Financial Supervisory Service (FSS) Governor Lee Bok-hyun vowed to revamp its supervisory system, stressing the importance of transparent and streamlined regulations that are in line with global standards.

During the 15th FSS SPEAKS, an annual forum held on Thursday for dialogues with foreign financial firms stationed in Korea, the FSS chief highlighted that the state-run regulator will take the utmost measures to build market trust in times of increased market uncertainty and growing concerns.

“With the accelerated digital transformation, the financial industry is facing a complex challenge where rapid digitalization blurs the line between the financial and non-financial sectors. There's also a growing demand for greater access to the Korean financial market and a better regulatory system that is in line with global standards,” FSS Governor Lee said during his keynote speech for the annual forum held at the Federation of Korean Industries (FKI) Tower Conference Center in Yeouido, Seoul.

“To this end, we decided to lift the mandatory registration policy for foreign investors and put in place an exclusive review process for foreign funds' registration. We also set up the Fintech Innovation Fund to boost investment, while establishing a new regulatory framework for virtual assets. Going forward, the FSS will spare no effort to create an ecosystem where innovation can flourish on the back of a healthy financial market,” Lee continued.

In addition, the FSS Governor put forth the intention that the supervisory agency will aggressively and proactively respond to the potential risks of various markets by urging financial companies to beef up their loss-absorbing capacity. He also called on foreign financial firms to share their best practices and systems with the Korean financial market.

U.S. Ambassador to Korea Philip Goldberg delivers a congratulatory speech during the FSS SPEAKS 2023 held at the Federation of Korean Industries (FKI) Tower Conference Center in Seoul, Thursday. Courtesy of FSS

Approximately 240 executives from foreign financial firms and embassies attended this year's annual forum, titled Trust and Innovation: A New Era of Finance. High-profile attendees included U.S. Ambassador Philip Goldberg, U.K. Ambassador Colin James Crooks, Australian Ambassador Catherine Raper, Netherlands Ambassador Joanne Doornewaard, and Indonesian Ambassador Gandi Sulistiyanto.

In his congratulatory speech, U.S. Ambassador Philip Goldberg celebrated the 70th anniversary of the U.S.-ROK alliance, which has been expanding into a global economic partnership. Goldberg noted that Korea is an essential partner of the U.S. in both military and economic security, stressing the joint developments of the two countries, which rely on a sound and trusted financial system and that consumer trust underpins the foundation of the financial system.

U.K. Ambassador Colin Crooks highlighted the importance of mutual cooperation in the area of sustainable finance, saying that he looks forward to building on the strong relationship between the two countries.

Financial Supervisory Service (FSS) Governor Lee Bok-hyun, center in the front row, stands alongside CEOs and key executives from foreign financial firms as well as ambassadors at the FSS SPEAKS 2023 held at the Federation of Korean Industries (FKI) Tower Conference Center in Seoul, Thursday. Courtesy of FSS

During a subsequent presentation session at the forum, Xiaojia Zhi, chief economist from Credit Agricole Corporate and Investment Bank, forecast that the global economy is likely to head for a soft landing this year, considering the possibility that the U.S. key interest rate would reach its peak during the first half of this year, and continue at that level.

She also projects China's reopening would push the growth of the global economy this year, contributing to the stabilization of Korea's external balances as well as supply chains. The economist also assessed Asian banks, in general, to have more resilience compared to U.S. or European banks.

In another presentation, Chandra Malika, chief operating officer (COO) for Asia Pacific at Deutsche Bank AG, said macro shifts, the climate crisis and rapid technological advances will lead to further changes in the business environment in the future.

Participants also held in-depth discussion sessions with the supervisory agency, briefed about the financial authority's specific plans for supervision and inspection framework. The FSS plans to reflect the opinions of foreign financial firms or voices collected during the sessions, vowing to continue direct communications with them.