FSC downplays transfer of authority

The Financial Supervisory Commis-sion yesterday downplayed the Cabinet's decision to trim the newly-established agency's authority, saying that it would not be able to comment until it knew more about the implications of the proposed governmental restructuring regulations.

The Cabinet approved on Wednesday a draft bill that would return financial policymaking rights to the Ministry of Finance from the Financial Supervisory Commission.

The commission's power to determine financial policies involving the banking, securities and futures and insurance sectors had been taken away from the Ministry of Finance when the commission was established in July. The new bill brings these functions back to the ministry.

The changes in the draft bill were suggested by the Cabinet's Research, Development and Evaluation Commission, and the Cabinet proposed a two-year grace period for the changes to take effect.

"The Research, Development and Evaluation Commission will make a clarification on this issue later on," the commission's chairman Kong Jaw-sheng (龔照勝) said late last night, declining to elaborate.

However, Legislative Speaker Wang Jin-pyng (王金平) said yesterday morning that Kong had paid him a visit to tell him that financial policymaking rights and supervisory rights should not be separated, and that there was no such an example in either the US or Japan.

Kong last night denied that he had ever said so.

"We are not advised in advance and are not able to comment at the moment, as we are not clear about what the connotation of `financial policymaking authority' in the draft amendment would be," the commission's vice chairperson Susan Chang (張秀蓮) said.

Academics yesterday criticized the government's policy flip-flop, saying that the decision was an improper move.

"[The decision] does not make any sense," said Yeh Yin-hua (葉銀華), a professor of finance at Fu Jen University. "I cannot see the reason for separating the policymaking and supervision authorities."

Using the Central Bank of China as an example, Yeh said that the agency wields combined power over policymaking, business and supervision.

"The separation would cause difficulties in coordinating the creation and implementation of policies," Yeh said, adding that the Cabinet does not need to worry about the agency's independence under the supervision of the Legislative and Control Yuans.

The policy turnaround on the newly-established commission is difficult to understand and could also lead to trouble in arranging high-level manpower that had been moved just two months ago, he said.

The commission was formed on July 1 as a single regulator to oversee more than 700 financial institutions. It was made possible through the combination of the Ministry of Finance's Bureau of Monetary Affairs, the Department of Insurance, the Securities and Futures Commission and the central bank's Bank Examination Department.

The Cabinet officially approved draft amendments to a government structuring law to streamline the Executive Yuan's 36 agencies to 22, including 13 ministries, four commissions and five independent institutions on Wednesday.