FX Law and Regulations in Korea: Problems and Prospects

Abstract

The last two decades of the Korean foreign exchange market regulations, especially aftermath the 1997 Asian financial crisis, can be characterised by an increased emphasis on the capital account liberalisation and deregulation. Although several new types of regulatory measures were implemented to enhance market resilience in the midst of the 2008 global financial crisis, strict control measures were largely eased in order to facilitate cross border trades. However, there are still many remaining unresolved problems and the rapidly changing financial environment poses new challenges for legal institutions surrounding the foreign exchange market. This contribution aims to shed some light on the Korean government’s efforts to facilitate foreign transactions, while maintaining equilibrium in the balance of payments and stabilising the value of currency by regulating the external shock-sensitive market. It also offers some insight for the authorities to consider to improve the legal system by providing an in-depth analysis of the recent notable changes in the regulatory landscape.