Vice-Chairman Kim Yong-Beom of Financial Services Commission Emphasizes Preliminary Preparation over Regulations on Cryptocurrency

Oct 24, 2018

Vice-Chairman Kim Yong-beom of Financial Services Commission (FSC) emphasized that preparing for possible dangers in advance is more necessary than preparing regulations for cryptocurrencies.
“Virtual currency that frequently crosses borders requires internal cooperation to prevent regulatory arbitrage.” said Vice-Chairman Kim at FSB (Financial Stability Board) that was held in Ottawa, Canada on the 22nd (Canada Time).
FSB is a group that pushes for reformation of financial regulations to stabilize global financial systems according to G20 agreement and it forms recommendations for internal standards and policies. Evaluation on vulnerabilities of global financial systems and evaluation on effects of regulatory reform were discussed as major topics at this general meeting. FSB also chose ‘non-bank financial intermediation’ as the word that would replace ‘shadow financing’.

Vice-Chairman Kim Yong-beom of Financial Services Commission <Vice-Chairman Kim Yong-beom of Financial Services Commission>

FinTech, cryptocurrency, cyber security, and non-bank intermediation have emerged as new vulnerabilities that threaten stability of global finance. “Because FinTech and Industry 4.0 are accelerating de-intermediation and decentralization of traditional financial industries, there will be limitations on regulations between different financial industries if this phenomenon becomes deepened.” said Vice-Chairman Kim. “There is a need to discuss about political alternatives such as restructuring entire regulation system.”
Besides these topics, there were discussions about how other potential threats such as rise in interest rate due to normalization of monetary policies by major countries and high debts can impact stability of global finance.
Capital outflow by rising countries due to rise in interest rate by the U.S., political risks such as Brexit, and rise in tension on trades were pointed out as major downside risks. FSB is planning to perform ‘too big to fail’ policies and improve resiliency of non-bank financial intermediary organizations.
“There is a possibility that non-bank financial intermediation can show unexpected reactions to outer impact as contract information is unclear and as it is tied to bank guarantee.” said Vice-Chairman Kim. “FSB also needs to start having systematic discussions about ways to manage macro-prudential of non-bank industries.”
Staff Reporter Ryu, Geunil | ryuryu@etnews.com

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