This work presents a critical analysis and evaluation of the Korean banking regulatory and supervisory system. It identifies the continuing structural weaknesses of the system, which were thrown into sharp relief by the 1997 financial crisis, and focuses on the need for reform in order to achieve financial stability. The study centres around three central questions: who should be the regulator; what substantive standards of supervision should be applied; and administratively, in what manner should these standards be applied? The author argues that the Korean banking system, characterized as a "governmental control system" for credit allocation, should be released from undue governmental and political interference, thus allowing the involvement of banks in commercially oriented practices without exposure to the significant risks incurred by governmental policy directed lending. The author calls for a high degree of transparency and accountability, for a clear, realistic timetable for restructuring, and for an effective exit policy for troubled commercial banks. This text should be of value to practitioners, researchers and academics working in the field of banking law, particularly those with a special interest in the Asia-Pacific region.