BOK leader takes a guarded stance on fintech

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BOK leader takes a guarded stance on fintech

The country’s financial regulator hailed financial technology or fintech as the next big thing but the chief of the central bank took a more guarded approach on the emerging combination of financial services and technology.

Governor Lee Ju-yeol of the Bank of Korea underlined the potential risks associated with the spread of fintech on Friday in a meeting with the heads of major banks, calling on the institutions to strengthen risk management in relation to the sector.

“The digital revolution can have an impact on payment systems and transmission of monetary policy,” he said.

Lee said that the issue of digital revolution in the finance sector has caught his attention. The bank governor is preparing for a meeting of G20 finance ministers and central bank governors in Baden-Baden, Germany, on March 17-18.

“The digital revolution delivers diverse opportunities and increases convenience, but there are also risks,” Lee said. “The meeting is expected to give an opportunity to discuss ways to develop the digital technology in a way that ensures transparency and security.”

He expected that the discussion for international standard or rules aimed at ensuring digital security might be covered.

Lee also noted that Korea is slow in enacting legislation of new financial technology, pointing out that the United States and Japan already are working on legislation for bitcoin, a digital currency.

While it is legal to use bitcoin in Korea, there is no legislation directly regulating bitcoin or other virtual currency.

The Financial Services Commission said in January that bitcoin can not be classified as public currency, but it added that the regulator will design regulations on its use to enhance transparency of the transactions.

Besides the fintech issue, the governor and the bank heads discussed the current economic condition and the challenges facing the country’s economy.

“The participants assessed the current financial markets stable due to the influx of investment from foreigners, despite high uncertainties surrounding the economic policy of the new administration in the United States and the U.S. rate hikes,” the Bank of Korea said in a statement.

The banks also took note of the growing risks of vulnerable debt holders as the central banks worldwide including the U.S. gradually increase benchmark interest rates.

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