The draft of the financial supervisory board organization law is likely to be passed by the Executive Yuan today, and be submitted to the Legislative Yuan forthwith.
The draft is one of the boldest efforts toward reform put forward by the Chen Shui-bian (陳水扁) administration, and seeks to create one of the most powerful portfolios in Taiwan's government.
After the new regulatory agency is set up, much of the power of the finance ministry will be transferred to the new agency.
The functions of the financial supervisory board are drawn from a number of different agencies, including the Ministry of Finance, the Central Bank of China and the Central Depository Insurance.
Ministry of Finance gutted
However, the bulk of powers and prerogatives of the new agency are to be drawn from the finance ministry, which, by all accounts, has been less than cooperative with the creation of the new agency.
The position of the financial supervisory board within the chain of government command would be directly under the Executive Yuan on an equal basis with other Cabinet ministries.
There are to be nine members on the financial supervisory board, each with four-year terms. Among the nine members, there would be one chairman; two deputy chairmen, four full-time commissioners, and two part-time commissioners, who would be the current deputy finance minister and deputy governor of the central bank. The total number of staff is to be set between 900 to 1,100 people.
After the financial supervisory board launches its operation, most of the supervisory functions currently carried out by the finance ministry would be transferred to the new agency, including securities, banking and insurance regulation. The remaining functions of the finance ministry would primarily be the administration of tarrifs and taxation.
The finance ministry, responsible for amending the financial supervisory board draft, has come under criticism for being unusually slow and uncooperative during the enterprise.
In response to the foot-dragging, Premier Chang Chung-hsiung (張俊雄) has asked Minister Without Portfolio Chung Ching (鍾琴), who has been in charge of the review, to set up a timetable for a completion of the review, as the premier wants no more road blocks in the setting up of the new agency.
Powerful Cabinet post
Since most of the finance ministry's regulatory powers would be shifted to the new agency, the position of the chairman of the supervisory board is likely to be more appealing than that of finance minister. The position of the new supervisory board chairman is likely to be as important as the governor of the central bank.
One of the more distinguishing characteristics of the financial supervisory board is that it will be the first government agency which charges its fees directly from the private sector.
Initially, the government will provide NT$600 million for its initial operations. After that, the supervisory board will survive on fees from the financial services sector. The regulatory fee is to be set between 0.03 percent to 0.1 percent of each company's annual revenues, depending upon the type of services a company offers.
Another breakthrough in the draft is that the new financial supervisory board would have the judicial power to conduct independent investigations. Financial regulatory agencies, including the Securities and Futures Commission, have been requesting such powers for years. This is the first time that a non-judicial government agency would be given such power.
According to the draft, anyone who disobeys an investigation request on interrogation and book examination by the supervisory board could be fined between NT$50,000 to NT$250,000.
In order to allow the new agency to function independently, the draft also stipulates that no more than half of the nine-member board could belong to the same political party. While working for the supervisory board, no commissioner on the board would be permitted to attend political party activities.
The financial supervisory board would be responsible for the regulatory work of the financial services industry, including banking, insurance, securities, futures, and other related sectors.
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