The Foreign Exchange Transactions Act (FETA) regulates the exchange rate system, foreign exchange operations, payment and receipt of foreign exchange and certain capital movements. It also delineates the business and responsibilities of foreign exchange business institutions.
The FETA is supplemented by a presidential, or enforcement, decree and a set of regulations. The decree establishes the framework of the system, which is then administered through the regulations. The regulations are issued by the Minister of Strategy and Finance and may be subject to more frequent amendments. The Minister may delegate a part of his regulatory authority to other institutions, such as the Bank of Korea, the Financial Supervisory Commission and the Customs Service.
There are two other acts related to foreign exchange regulation which supplement the FETA: the International Trade Act (ITA) and the Foreign Investment Promotion Act (FIPA).
The purpose of the ITA is to contribute to national economic development by achieving a dynamic equilibrium in the balance of trade and fostering the growth of international trade through the promotion of trade transactions and the establishment of fair trading practices. Its basic function is to regulate commodity flows; in this respect, it differs from the FETA, which regulates the money flows.
The FIPA, on the other hand, seeks to encourage the investment of foreign capital and the introduction of foreign technology to Korea, and to manage and utilize such foreign capital and technology effectively.