An Overview of Reform and Liberalization of Financial Services Sector in Korea

초록

Since the outbreak of the financial crisis in December 1997, major steps have been taken to restructure the financial sector in Korea. A wide range of financial reform has provided a cornerstone for future profitability and stability of the financial system in Korea. In particular, various measures to clean up financial institutions' balance sheets helped normalize the financial system earlier than expected and ease the credit crunch situation significantly. The financial reform has also brought about many significant changes in the Korean economy, including a solid economic recovery and the restoration of the sovereign credit rating. The liberalization of the capital market and the foreign exchange, which were aggressively pursued during the reform process, have also brought about a number of positive results to the Korean economy. In particular, the injection of foreign capital, which were induced by the liberalization of the capital market and the foreign exchange, contributed much to facilitating financial sector reform and producing qualitative developments in the foreign exchange market during the post-crisis period. Despite these positive results, further improvements are required to build a stronger and more competitive financial industry that can withstand and compete in a fierce international market. In order to sustain the initial spirit behind the reform, the market needs to lead the reform, moral hazard be eliminated, and a new market-based rule be established.