Executive Yuan set to approve draft of FSB law

FINANCE: The Cabinet is again trying to pass rules to create a supervisory board after a similar draft failed make it through the legislature before the session ended in January

By Ko Shu-ling  /  STAFF REPORTER

Wed, May 15, 2002 - Page 4

The Executive Yuan is scheduled to approve the draft of the financial supervisory board law today, which will give the board authority over the financial services industry -- including the banking, securities, futures, and insurance sectors.

The financial services industry is under the supervision of the Cabinet's Ministry of Finance, the central bank and the Central Depository Insurance Co.

While the banking, securities, futures and insurance sectors are regulated by the Ministry of Finance, the job of financially examining banks is shared among the Ministry of Finance, the central bank and the Central Depository Insurance Co.

Although the legislature's Finance Committee passed the first reading of the draft legislation last October, it failed to pass the second reading before the legislative session ended in January.

To pass the draft into law, the Cabinet must repeat the process all over again. That means it has to approve the draft during the Cabinet-affairs meeting before sending it to the legislature for further review and final approval.

How to nominate the nine members of the board was a point of dispute between the ruling and opposition parties during the last legislative session.

While the Cabinet preferred to appoint the entire board without the consent of the legislature, opposition parties argued that the nominations should be made by the nation's major political parties.

Under the draft proposal, there would be nine members on the financial supervisory board, including one chairman, two deputy chairmen and six commissioners -- one of whom would be reserved for someone under the incumbent deputy finance minister and another who would serve under the deputy governor of the central bank.

All nine members would be nominated by the premier and approved by the president. If board members come from the same political party, the total number could not exceed four.

The draft would also require all board members to be experts in such areas as law, economy, finance, taxation, accounting and management.

Funding for the supervisory board come from three major sources: the government budget, the fees levied on the financial sector, and the interest from the fund itself.

All the receipts and disbursements -- as well as the management of the fund -- would be under the supervision of both the Cabinet and the legislature.

The draft for the financial supervisory board was first proposed by the KMT government years ago. However, the draft failed to pass into law because of a number of controversies regarding its structure and management.