[Infostock Daily= Economics Journalist, Han Chi-ho] These days, the Bank of Korea and the Financial Services Commission (FSC) have made harsh criticism to each other over the Electronic Financial Transaction Act.
Lee Ju-yeol, the Governor of the Bank of Korea (BOK), warned that the act will grant the FSC power to access personal information of financial consumers in electronic payments. He also called it as a 'Big Brother' law.
In essence, the FSC can access the privacy of Korean citizens. Eun Sung-soo, Chairman of the FSC, renounced the claim and called it 'nonsense'.
If there is a concern about personal information(PI) leakage, PI can be encrypted. If that is not an enough measure, then some PI can be removed for security.
The National Assembly is divided over the act. The Strategy and Finance Committee sided with the BOK, the agency in charge. The Political Affairs Committee took the side with the FSC, the agency in charge.
The act triggered by a dispute over the jurisdiction of the Korea Financial Telecommunications & Clearings Institute (KFTC) has became a hot potato.
Last week, Representative Bae Jin-kyo of the Justice Party serving in the National Policy Committee and the Financial Union made a claim that the act is in favor of Naver.
They warned that the revision of the act would grant a big favor to big tech companies and would result in a second private equity crisis.
What is the private equity crisis? It was a unprecedented financial crisis caused by excessive private equity sales of Banks and securities firms what were blinded by high profits.
We need to look into the claims deeper for their motives. Financial companies such as banks and insurance companies are undergoing major changes. Banks are offering a lump sum of severances and consolation monay to reduce the number of branches and employees.
Insurance companies, which seemed to have a perpetual growth, are also keen to reduce their size by separating sales organizations.
The main reason for downsizing is the rapid growth of big tech companies in finance sector, including Kakao Bank, with their outstanding sales methods and financial products.
Financial companies and members have argued that big tech companies such as Naver, Kakao, and NHN should be regulated in the same way.
They claimed that deregulation made the barrier of entry lower for big tech companies. What they really want is that financial authorities should restrain the growth of big tech companies with stricter administrative regulations.
The Financial Services Commission plans to begin full-fledged supervision and monitoring of big tech companies after the revision of the the Electronic Financial Transaction Act. Big tech companies are already aware of this plan and financial companies with good public relations are aware of it to some extent.
Then why did Representative Bae used the word 'preferential treatment'?
The Justice Party has received the largest number of votes from labor unions, and they are the top priority when setting up policies. Thus, massive restructuring of the financial firms cannot be ignored.
There is no way that Representative Bae really believed the claims that financial union the EFS Act was in favor of big tech companies and cause the 2nd private equity crisis. If he indeed believed such claims, then he should transfer to the Environment and Labor Committee to look out for unions instead of the National Policy Committee, which needs a group of experts in economy.
Let's turn our attention to the Bank of Korea. Some people in the BOK say, "Governor Lee Joo-yeol does not want to be rembered as the governor of the BOK, who lost the control of the the Korea Financial Telecommunications & Clearings Institute".
Since the President Park Geun-hye administration, The Governor Lee has been criticized by the market for his monetary policy with no direction. He is now on the verge of being recorded as the Governor of the BOK, who caused controversy and caused the regression of the Korean financial industry because he did not want to be insulted by his juniors ahead of his retirement.
Representative Bae Jin-kyo and Governor Lee Ju-yeol should look back on whether their actions are going against the huge trend of change because of self-interest and personal honor.
Economics Journalist Han Chi-ho