Wednesday, September 1, 2010

[G20] Interview: architect of global finance




Kim Yong-beom director general of the Global Financial Architecture Bureau, G20 Seoul Summit Committee



Kim Yong-beom uses carrots and sticks to push everyone to meet the deadline for financial sector reform


The G20 summit does not write the financial industry reform plans by itself. This is the outcome of two international meetings of regulators and central bankers, called the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board (FSB). Likewise, the task of strengthening the global foreign-exchange system is mostly upon the International Monetary Fund and World Bank. 

What the G20 meeting _ with Kim as their delegate _ does is macro-level project management. He endeavors to make sure those institutions deliver results by the November deadline. It is not an easy job _ it took a decade for the BCBS to produce the set of banking regulations which is currently in use, known as Basel II, and the G20 leaders want to have Basel III in little more than two years time since the idea was first contemplated. 

In an ordinary situation, it is an overly ambitious mission. But the financial crisis spurred it on because it created a common sense of urgency among regulators from different countries. Political pressure from the G20 is critical, too. The tendency of Korean to emphasize speed is also propelling fast-track negotiations. Meeting the deadline is more relevant to anything in order not to lose the momentum of the G20 meeting. 



By Cho Jin-seo

When you walk into the second-floor office of Kim Yong-beom, you can see a whiteboard filled with short English praises. “Light is the best disinfectant” was one of them last Wednesday; another read, “give some space to dissidents.” They seemed to have metaphorical meanings, but Kim shrugged off the reporter’s suspicion. 

“Isn’t the English language very enjoyable?” he asked in an interview with The Korea Times last week, noting that he writes something on the board only when he is attracted to the phonetic charm of a phrase. Then he repeats the second phrase, with an unusually strong stress on “dissidents.”

When he wrote the phrase, he was probably mindful of the dissidents within the G20 group. As a senior member of the Seoul Summit committee, his job is to supervise multilateral negotiations on reform of financial institutions, economic development and financial regulation revisions - pretty much everything meaningful on the G20 agenda. It is not surprising that the negotiations do not always go smoothly. 

Among many topics the G20 summit deals with, the financial sector and financial institutions reform are at the core. And these issues have their fair share of troubles and troublemakers, as no country want to sacrifice its profit for others. Solving problems and producing agreements from multiple interest parties is as sophisticated a matter as suggested by his official title. 

The G20 summit does not write the financial industry reform plans by itself. This is the outcome of two international meetings of regulators and central bankers, called the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board (FSB). Likewise, the task of strengthening the global foreign-exchange system is mostly upon the International Monetary Fund and World Bank. 

What the G20 meeting - with Kim as their delegate - does is macro-level project management. He endeavors to make sure those institutions deliver results by the November deadline. It is not an easy job - it took a decade for the BCBS to produce the set of banking regulations which is currently in use, known as Basel II, and the G20 leaders want to have Basel III in little more than two years time since the idea was first contemplated. 

In an ordinary situation, it is an overly ambitious mission. But the financial crisis spurred it on because it created a common sense of urgency among regulators from different countries. Political pressure from the G20 is critical, too. The tendency of Korean to emphasize speed is also propelling fast-track negotiations. Meeting the deadline is more relevant to anything in order not to lose the momentum of the G20 meeting. 

Digging into the English language’s wisdom and linguistic beauty in his spare time may be a good way to cool his head. But what helps him the most while completing his duties for this crucial position for the success of the G20 summit in Seoul is not wordplay, but his reputation and extraordinary experience. 

Elitism may the most appropriate word to describe his career, but actually it is a combination of rare merit and rare luck. As a Seoul National University graduate, Kim began his professional career in 1988 at the then Ministry of Finance where he gained experience with the treasury department. In 1992, he went to George Washington University on a Fulbright Scholarship for his Ph.D. His research focus was national development. 

“I was a sort of a macro guy at school. But when I returned to Korea, I was sent to do micro-economics stuff at the capital markets and the financial system bureau,” he recalls. Back in Korea, he faced the Asian Financial Crisis. The micro-department was suddenly entitled to perform the massive role of opening Korea’s capital markets and designing a new industry and regulatory structure. It was an exhausting, but valuable experience for a policymaker.

When the crisis was mostly overcome by 2000, Kim left the ministry to work for the World Bank as a senior economist. He said he was again fortunate to be included in the China team, which was one of the most coveted positions in the organization. “I gained confidence when I realized I was one of the few economists who had hands-on experience as a policymaker,” he said. 

During a five-year stint in Washington until 2005, the South Korean finance ministry did not terminate his contract and kept him on an indefinite leave of absence. It was, and still is, a very unusual practice for any government agency. 

“It was like an umbilical cord was still attached to me,” he says. Through this, he was called to help the then-President Roh Moo-hyun in setting economic policies, while working as the director of the banking division at the ministry. 

On top of his shining academic and public sector career, Kim even spent some time inside the finance industry, as the head of the $22-billion insurance division of the Korea Post in 2009. Kim is only in his 40s, so what he does after the G20, one can only imagine. But at least until November, his mission is to use carrots and sticks to make sure the G20 members produce beneficial and timely results _ with only 80 days to go until the Seoul Summit. 

“Sometimes, I feel that we have put everyone in too much of a rush to meet our deadlines. But on the other hand, it is good to put some pressure on the participants of the summit,” he said. “People are beginning to appreciate this pressure from Korea, as the chairman of the Basel Committee told me ‘you should be proud of yourself.’” Without the occasional whipping by someone like him, countries and international financial institutions may have fallen into complacency and the G20 may never complete its mission of financial reform, he said. 

Before ending the interview with this reporter, Kim showed another writing on the board: “Sow in the good times, reap in the bad times.” When things go according to plan, there will be no bad times, just thanksgiving parties in coming November.



G20 commemorative coin : The Bank of Korea (BOK) makes public the image of the commemorative coin for the G20 Summit to be held on Nov. 11 and 12 in Seoul. The central bank will release it on Nov. 3. /Courtesy of BOK

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