Bank of Korea: "Regulations Needed for Digital Innovation... Referencing EU Commission Recommendations"

[Asia Economy Reporter Kim Eun-byeol] The Bank of Korea stated on the 22nd that "it is necessary to establish appropriate regulatory measures that can ensure financial stability and consumer protection without hindering digital innovation." Amid rapid structural changes in the financial industry due to the integration of new technologies such as artificial intelligence (AI), big data, and blockchain, it emphasized the need to develop a regulatory framework suitable not only for digital financial innovation but also for financial stability and consumer protection.

On the 22nd, the Bank of Korea introduced the "30 Recommendations on Regulation, Innovation, and Finance" announced by the "Regulatory Obstacles to Financial Innovation Expert Group (ROFIEG)" under the European Union (EU) Executive Commission in its 'Overseas Economic Focus' report and made the above statement.

The Bank of Korea explained, "The EU Executive Commission's fintech-related recommendations focus on establishing appropriate regulatory measures that can achieve financial stability and consumer protection without hindering digital innovation. While most fintech financial services are not assessed to fundamentally change the existing regulatory framework, they may complicate the financial regulatory environment, so it is necessary to enhance the regulatory authorities' response capabilities in various ways."

This is because, although fintech offers advantages such as cost reduction and diversification of products and services, there can be issues with unclear legal responsibility when important decisions are made based on AI algorithms.

The Bank of Korea added, "As discussions are underway in South Korea to reflect changes in technology and market ecosystems due to fintech innovation in financial services, the EU Executive Commission's recommendations can serve as valuable reference material."

The 30 recommendations by ROFIEG can be broadly categorized into four areas: ▲ innovative use of technology within the financial sector ▲ creation of a level playing field for fair competition ▲ access to data ▲ financial inclusion and ethical use of data.

ROFIEG recommended adjusting current regulations to respond to new risks that may arise from the use of innovative technologies and to promote RegTech and SupTech. RegTech is a compound of regulation and technology, referring to the use of innovative technologies by regulated entities such as financial institutions to effectively comply with regulations and laws, thereby enhancing consumer trust and compliance. SupTech is a compound of supervision and technology, meaning the use of innovative technologies by supervisory authorities to efficiently perform financial supervision tasks.

It also recommended ensuring fair competition between existing financial institutions and new market entrants, while devising measures to resolve regulatory differences among countries within the EU. Furthermore, it advised establishing relevant regulations considering the benefits and potential risks offered by fintech innovations that utilize both personal and non-personal information.

Additionally, it recommended that related regulations be established with full consideration of the potential impacts fintech may have on financial inclusion and the ethical use of data.

This content was produced with the assistance of AI translation services.