BOK Refutes Eun Seong-su's Remarks: "Financial Services Commission Cannot Control Payment and Settlement Systems"

On the 14th, the Bank of Korea rebutted Financial Services Commission Chairman Eun Sung-soo's statement regarding the amendment to the Electronic Financial Transactions Act, in which he mentioned that "there is no infringement on the authority of the Bank of Korea," by asserting that "the Financial Services Commission should not control the payment and settlement system."

On the 15th, the Bank of Korea stated, "The Financial Services Commission overlooks the fact that the operation and management of the payment and settlement system is an inherent task of the central bank," adding, "The Financial Services Commission's designation and supervision of the Korea Financial Telecommunications and Clearings Institute as an electronic payment transaction clearing institution means that the supervisory authority controls the operation and management of the payment and settlement system, which is an inherent function of the central bank. This denies not only the role of the central bank but also the central bank system itself, and there is no precedent for this in other countries."

Earlier, Chairman Eun said at a year-end press conference regarding the amendment to the Electronic Financial Transactions Act proposed by Assemblyman Yoon Kwan-seok, "There is no infringement on the Bank of Korea's authority; rather, its scope of work may expand, and the Bank of Korea's concerns are reflected in the supplementary provisions."

The Bank of Korea explained, "Just as the supervisory authority, the Financial Services Commission, should not interfere with the base interest rate decision or currency issuance, it should not control the payment and settlement system either," adding, "Payment and settlement operations are an inherent task of the central bank, which holds the issuing authority. The core functions include managing settlement risks and providing liquidity support to prevent confusion in case of settlement failures."

Regarding the Financial Services Commission's claim that the amendment includes supplementary provisions exempting the Korea Financial Telecommunications and Clearings Institute from permission, inspection, and supervision to address the Bank of Korea's concerns about infringement, the Bank of Korea pointed out that the direction to forcibly incorporate the Korea Financial Telecommunications and Clearings Institute as a clearing institution has not changed. The Bank of Korea said, "Basically, the Financial Services Commission is granted jurisdiction over payment and settlement clearing operations and intends to delegate only some supervisory duties over the Korea Financial Telecommunications and Clearings Institute to the Bank of Korea," adding, "Although some supervision is exempted by supplementary provisions, the Financial Services Commission still retains strong supervisory authority over the Korea Financial Telecommunications and Clearings Institute, including revoking business licenses, issuing corrective orders, and disciplining institutions and employees."

The Bank of Korea further stated, "It is not a matter of exempting some supervisory duties over the Korea Financial Telecommunications and Clearings Institute, but the payment and settlement system, which is ultimately settled and supported with liquidity by the Bank of Korea, should be excluded from the scope of electronic payment transaction clearing operations," adding, "The amendment effectively forces the Korea Financial Telecommunications and Clearings Institute to be incorporated as a clearing institution by deeming it to have obtained a license for electronic payment transaction clearing operations in the supplementary provisions."

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