Trang Chủ
Reporter: Dear Mr. JaeHoon Yoo, what agencies does the financial safety net in Korea comprise? What are the roles of each agency, and how do they coordinate with each other within the financial safety net?
Mr. JaeHoon Yoo: Korea has a well-established financial safety net with a clear allocation of mandates and powers. The Financial Services Commission (FSC) is the financial regulator in charge of the overall procedures for financial policy – making and supervising financial institutions. The Financial Supervisory Service (FSS) carries out financial supervision under the FSC’s guidance. The KDIC, as the resolution authority and the deposit insurer, deals with the overall aspects of resolution proceedings in collaboration with the FSC. The Ministry of Economy and Finance (MoEF) and the Bank of Korea (BOK) are also members of the financial safety net in Korea.
These authorities hold regular meetings for inter-agency coordination, and they also have an MOU to facilitate the information flow.
Reporter: In Korea, which agency is responsible for determining the resolution of troubled financial institutions? As a member of the financial safety net, what role does the KDIC play in the resolution process?
Mr. JaeHoon Yoo: The FSC and the KDIC have the authority to determine the resolution of troubled financial institutions. However, in practice, the FSC usually determines the resolution method along with the declaration of failure. Prior to this, the KDIC conducts a least-cost test to help the FSC choose the resolution option that minimizes costs to the deposit insurance fund.
The KDIC is responsible for a number of practical aspects ofresolution such as financial assistance, depositor reimbursement, public auction process for Purchase & Assumption (P&A) and Merger & Acquisition (M&A), establishment and management of a bridge bank, and recovery of injected funds, etc.
Reporter: After nearly 30 years of establishment and development, the role of the KDIC has been increasingly strengthened. In your opinion, how has the revision of the Depositor Protection Act impacted and shaped the role of the KDIC?
Mr. JaeHoon Yoo: The KDIC was established in 1996 when the Depositor Protection Act was first enacted in Korea. Since then, the Act has undergone several revisions. Two major changes occurred: the first during the Asian financial crisis in 1997, and the second following the global financial crisis in 2008. During those periods, the role of the KDIC became more significant, and the number of tasks assigned to our organization also increased.
Reporter: Through various cooperation activities over the past time, the KDIC and the DIV have gained a certain understanding of each other in various aspects. What are your observations on the development of the DIV?
Mr. JaeHoon Yoo: I think that the development of the DIV is truly an impressive step forward. We regularly participate in meetings with deposit insurers worldwide in Basel, Switzerland. Among approximately 120 deposit insurers, the DIV stands out to the extent that even in developed countries, only a few deposit insurers have such capabilities and tasks as your organization. Therefore, I think that further enhancing the capacity and functions of such an outstanding organization is also a task for the DIV in the future.
Reporter: What suggestions do you have for policymakers in Vietnam regarding the role of the DIV?
Mr. JaeHoon Yoo: First of all, I would like to discuss a common principle. Financial supervisory agencies and resolution authorities differ in terms of roles and functions. Both supervisory and resolution functions are crucial to maintain a robust financial safety net.
However, supervision, financial regulation, and resolution cannot be centralized within a single agency; they should instead be entrusted to separate and specialized ones. In this regard, Vietnam has developed excellent agencies with a comprehensive legal framework. Therefore, it is crucial to maintain and enhance the capabilities of these agencies.
Reporter: The DIV will celebrate its 25th anniversary this year. Could you please share a few thoughts with the DIV on this occasion?
Mr. JaeHoon Yoo: First of all, congratulations on the DIV’s 25th anniversary! As mentioned earlier, I highly appreciate the DIV's remarkable development compared to other deposit insurers worldwide. As Vietnam's economy continues to grow and its financial sector expands further, the role of the DIV is becoming increasingly important.
Moreover, Vietnam is one of the leading countries in the ASEAN, which means that the DIV must fulfill numerous tasks to develop Vietnam's financial sector and contribute to the overall development of the region. Therefore, the DIV needs to develop further in the future, and the KDIC is committed to supporting this endeavour.
Reporter: Thank you very much, Mr. JaeHoon Yoo!
Department of Research and International Cooperation (translation)
