[Desk Column] Regulation, It's Really Easy, Right?

"Wrong Financial Regulation Easing" Presented as Top Priority Pledge by Every President
Reality Is Quite Different... Hundreds of Financial Regulation Bills Proposed, Financial Firms Often Strangled
Financial Firms Suffering from Years of Government-Controlled Finance Now Facing Political Finance Challenges

National Assembly Building / Photo by Moon Ho-nam munonam@

[Lee Cho-hee, Head of Finance Department] "We will also reform the financial law system by function to enhance regulatory consistency and transparency."

"What the government can do to create an environment where the domestic financial industry can develop is to remove related regulations."

"Wrong regulations should be boldly removed without hesitation, all of them."

"We will boldly eliminate financial regulations that hinder venture capital investment."

If you can guess who made the above statements, you can confidently consider yourself a 'max-level' current affairs expert. Each one has declared boldly that they will eliminate 'bad regulations' for the market. Who in South Korea could promise regulatory relief with such confidence? It is none other than the former presidents.

The first statement was made by the late President Roh Moo-hyun on February 27, 2004, at the 1st anniversary international seminar of the Participatory Government. The second comment was made by former President Lee Myung-bak on January 9, 2008, when he was president-elect, during a meeting with financial company representatives. The phrase "boldly remove without hesitation" was an instruction by then-President Park Geun-hye at the joint public-private regulatory reform inspection meeting on September 3, 2014. By this point, the last statement is easy to infer. It was a declaration made by President Moon Jae-in at the Innovative Finance Vision Declaration Ceremony on March 21, 2019.

Former presidents all vowed to innovate financial regulations as if by promise. Ironically, the fact that every new president has made regulatory relief across industries a major pledge means that no one has succeeded.

Of course, it is not that the presidents who have passed through the Blue House only talked without taking action. Historical evaluations may vary, but regulatory relief is one of the areas where past administrations have put considerable effort. So why does South Korea still bear the stigma of being a regulatory haven, and why does the industry keep calling for regulatory relief? The recent issue in the financial sector is also about regulatory legislation, including the Financial Group Supervision Act. These laws, which can tightly control financial companies, are being strongly pushed by the ruling party that holds three-fifths of the National Assembly seats.

All past administrations have made regulatory relief their first pledge. However, their governments instead issued regulations that tightened the market almost overnight. Why is that? The government is not a profit-seeking group but an organization that operates for public interest. What they do should be 'policy' aimed at expanding public interest, not 'business' like private companies. The easiest way to expand public interest is to restrict private interests and distribute the remaining benefits to the public. In South Korea, those whose private interests are restricted are mainly private companies. This is why regulations do not disappear in this country.

Although all past administrations promised regulatory easing at the outset, they failed to reach a sophisticated balance between private and public interests. Humans tend to choose the easy and convenient path. Most administrations chose regulation instead of deliberation. However, the word 'regulation' inherently carries a negative meaning that hinders development. Therefore, it is often disguised as 'policy.' But the lingering uneasy nuance remains unresolved. These disguised policies mainly target large corporations and major financial companies. This is because it creates the best scenario to gain populist support from the public. Regulation is a kind of populism.

The ruling party, armed with political reasons such as election pledges and a majority of seats, is poised to push through all regulatory bills. The opposition party, which should block this, is nowhere to be seen. We are now facing a historic moment. The 'government-controlled finance,' which has been cited as a chronic problem in the financial sector for decades, is fading, and instead, we are on the brink of an era of 'political finance,' where 'policies' are created solely based on political interests. It is the beginning of another misfortune.

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