Ever since Korea succumbed to the East Asian economic crisis in 1997, its financial sector has been restructuring itself in accordance with the terms of an IMF bail-out package, in addition to meeting urgent domestic banking needs. All this is taking place in the context of an international convergence of supervisory standards in the banking industry, spearheaded by the General Agreement on Trade in Services (GATS) and the "Core Principles" of the Basel Committee for Bank Supervision. This nexus of events makes the current reform of Korean banking laws of special significance as an example and a test of the "new international financial architecture" as it can be observed at work in a developing industrial economy.
This book is the first in-depth analysis of Korea's banking law reform program, its complex sources, its particular rules, the effect of international commitments as well as "soft law", the extent of economic recovery to date, and the trends and developments in banking practice and regulation likely to occur in the near future.
In the process the author examines such pervasive issues as the following: the need for both short-term and long-term banking sector infrastructures and the tension this creates the clear necessity to satisfy deep-seated societal predispositionsthe role of foreign banksensuring the transparency of bank managementthe role of banking regulatory institutionsand the importance of domestic financial stability in the global free market system
By revealing the implications for Korea of the international banking and financial standards and principles that are coming into effect throughout the trading world, Korea's Banking Law Reform lays bare the underpinnings of a domestic financial system geared to work efficiently in international financial markets, yet designed to protect its own "safety and soundness." This is a book to be read and studied by all professionals working in the financial sector, whether bankers, regulators, advisors, or investors.
List of Abbreviations
Preface; J.J. Norton
1. Prelude: Themes, Methodology and Context
I. Overarching Themes
II. Methodology and Context on the National Level
III. Methodology and Context on the International Level
2. Korea's Recent Financial Reforms: Law-based New Banking Regulations under the Recent Financial Crisis
II. Overview of the Korean Financial Crisis and Reforms
III. New Banking Regulations
IV. Corporate Implications from Bank Problems: "Chaebol" Regulations
3. Challenges to Bank Supervision: Compliance with International Standards
II. International Standards for Bank Supervision
III. Compliance with and Implications of the Basel Committee's Core Principles for the Korean Bank Supervision Reforms
4. Post-crisis Foreign Bank Regulations
II. Background to Foreign Banks' Presence in Korea
III. Regulatory Framework for Foreign Banks
IV. Entry of Foreign Banks
V. Supervision of Foreign Banks
VI. Treatment of Foreign Banks in Korea
VII. Concluding Observations
5. Summary of Conclusions and some Reflections
I. Regarding International Standards and Their Implications
II. Regarding National Reforms and Developments
Selective Reflections on Key International Legal Issues Respecting the Treatment of Foreign Banks, including the GATS
II. Multilateral Agreement on Banking Services: the "GATS"
III. Other International Instruments for the Treatment of Foreign Banks
Appendix I: 12 Key Standards for Sound Financial Systems of the Financial Stability Forum (FSF)
Appendix II: List of Foreign Banks in Korea (as of June 2001)
Appendix III: Korea's Schedule of Specific Commitments (Supplement 3)