November 29, 2010November 29, 2010

G20 G20 & Post-Summit Agenda for Sustained & Post-Summit Agenda for Sustained

Regulatory ReformRegulatory Reform

Senior Deputy Governor Senior Deputy Governor Financial Supervisory ServiceFinancial Supervisory Service

Dr. Lee Jang YungDr. Lee Jang Yung

OverviewOverview

G20 Seoul Summit: Significance & AchievementsG20 Seoul Summit: Significance & Achievements

Key Agreements at Seoul SummitKey Agreements at Seoul Summit

Post-Summit Agenda for Sustained ReformPost-Summit Agenda for Sustained Reform

G20 Seoul Summit: G20 Seoul Summit: Significance & AchievementsSignificance & Achievements

G20 Seoul Summit: Significance & G20 Seoul Summit: Significance & AchievementsAchievements

G20 Summit: Top Global Forum for Economic Cooperation

• December, 1999: Agreement among G7, 12 emerging market countries, and the EU

• November 15, 2008: Washington Summit on the global financial crisis

• Five Summit Meetings

- November 2008: Washington, DC- April 2009: London- September 2009: Pittsburgh- June 2010: Toronto- November 2010: Seoul

Key Agreements at Seoul Key Agreements at Seoul Summit Summit

Key Agreements at Seoul Key Agreements at Seoul SummitSummit

Agenda & Accomplishments

Summit Agenda

Agreements • Basel III • SIFI regulation• Macroeconomic policies• Reform of IMF governance

New Proposals

• Global financial safety net• Development

Future Agenda

• Macroprudential supervision• Regulatory reform from emerging market perspectives• Regulation on shadow banking• Consumer protection

CapitalCapital

Basel III

Liquidity

Leverage

Liquidity coverage ratio:

Net stable funding ratio:

▪ Leverage:

▪ Common equity ratio: 2.0% → 4.5%

▪ Capital conservation buffer: 2.5%

▪ Counter-cyclical capital buffer: 0.0% → 2.5%

Tier 1 capital

Nominal exposure≥ 3%

H.Q. liquid assets

30-day net cash outflow≥ 100%

Available S.F.Required S.F. ≥ 100%

Key Agreements at Seoul Key Agreements at Seoul SummitSummit

Basel III

Key Agreements at Seoul Key Agreements at Seoul SummitSummit

SIFI Regulation

• Loss-absorbency capacity

• Resolution framework

• More intense supervisory oversight

• Robust core financial market infrastructures

Post-Summit Agenda for Sustained Post-Summit Agenda for Sustained ReformReform

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Post-Summit Agenda for Sustained ReformPost-Summit Agenda for Sustained Reform

Implementation and Oversight

• Legal and regulatory harmony across countries & compliance

• Compliance and adaption of financial firms to new environment

Safety and Balance between Real & Financial Sectors

• Sustaining regulatory reform while promoting growth

• Korea committed to Basel III with minimal market disruption

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2

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Respect for Market InnovationRespect for Market Innovation

Innovation

• Efficient allocation of financial market resources

• Lower transaction cost

Optimal Regulatory FrameworksOptimal Regulatory Frameworks

• Stepped-up oversight of high risk areas (e.g., OTC derivatives)

• Support for productive real economic activities

• Fine-tuning of regulations

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Post-Summit Agenda for Sustained ReformPost-Summit Agenda for Sustained Reform

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G20 Seoul SummitG20 Seoul Summit

Emerging Market Economies

• Participation of five non-G20 members as invited countries

• Emerging market economies’ agenda in the G20 discussion - Global financial safety net - Development

Future Summit MeetingsFuture Summit Meetings

• Discussion on emerging market issues at the FSB, IMF, WB - Foreign exchange risks - Local regulation and supervision of internationally active financial institutions

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Post-Summit Agenda for Sustained ReformPost-Summit Agenda for Sustained Reform

Financial Regulation Reform AheadFinancial Regulation Reform Ahead

Balance between Advanced & Emerging Countries

Balance between Advanced & Emerging Countries

GlobalRegulatory Reform

GlobalRegulatory Reform

Asia as Growth EngineAsia as Growth Engine

Return to Global EconomicGrowth

Return to Global EconomicGrowth

ReformMomentum

Shared Growth beyond CrisisShared Growth beyond CrisisShared Growth beyond CrisisShared Growth beyond Crisis

THANK YOU