Executive Yuan nixes plan for watchdog

The Executive Yuan has revoked a draft proposal that would have established a financial monitoring agency dubbed the Financial Supervisory Board (FSB, 金融監理委員會), which was planned by the Ministry of Finance (MOF, 財政部).

The legality of the draft has been questioned by senior government officials and the Ministry of Justice. The MOF must now rework its proposal.

But analysts said the revocation would delay the overhaul of the present government's financial supervisory structure.

If the MOF cannot put the proposed agency on firm legal footing, any reform of the nation's financial regulatory framework would be postponed until the new government takes office after the March 18 presidential election.

Premier Vincent Siew (蕭萬長) had vowed in September to establish the Financial Supervisory Board by Jan. 1. But later he changed his stance and said he was not in a hurry to establish such an agency.

Division Four of the Executive Yuan had asked the Ministry of Justice and relevant agencies to study the legality of the FSB proposal after the MOF submitted its plans last year.

Last week the Ministry of Justice concluded that the FSB had been designed as a government agency under the Executive Yuan. Furthermore, a sub-agency under the FSB -- the General Bureau of Finance (金融總局) -- was a public judicial institution (公法人), the Ministry of Justice found.

But the legal framework of these two institutions do not fit into the Governmental Organization Law of the Republic of China. Therefore, the MOF's proposal was revoked and the ministry was asked to propose a new draft.

Paul Chiu (邱正雄), Minister of Finance, proposed months ago in a regular meeting of KMT's Central Committee to bring the nation's financial regulatory oversight under a single agency.

The MOF's proposal included a Financial Supervisory Board as a government agency under the Executive Yuan. Under the FSB would be the General Bureau of Finance -- a public judicial institution.

According to the proposed draft, the FSB would be responsible for legal aspects and policy making regarding the financial industry and markets.

The GBF would be responsible for executing policies promulgated by the FSB, which would be independent from intervention by legislators and other parties. The idea behind the arrangement was so that the GBF could more effectively supervise the financial sector.

Under the GBF, there is another agency called the Bureau of Financial Examination (BFE, 金融檢查局), which would combine the duties of examining and supervising the banking, securities, futures and insurance industries.

A number of existing regulatory agencies under the MOF and Central Bank of China (央行) would have been transferred to GBF and BFE under the MOF's plan.

Guo Woan-rong (郭婉容), a commissioner of the Executive Yuan and former Minister of Finance, said the draft proposed by the MOF had legal issues.

Ten percent of the personnel in the proposed agencies would be civil servants, but the remainder would be private employees who would not be supervised by the Legislative Yuan.

Such a design had to be reconsidered, Guo said.