The Hwan-chi-gi type receipt and the remit of foreign exchanges violate the Section 20 and 25 of the Foreign Exchange Transactions Act because it is not the formal receipt of invisible trade and is relevant to the criminal. However, such transactions are continuously happening in the real world and the cases will not decrease even if financial systems are well equipped. Rather, those fund transfer systems are prevalent and they are spreading like poison. Generally, the growth of informal funds transfer systems seem to have been negatively correlated to the level of development of the formal financial sector. Hwan-chi-gi type fund transfer operations appear to have prospered in connection with countries where financial institutions are inefficient and financial policies are restrictive.
Under such serious situations, this piece aims to get material implication from the Hwan-chi-gi transactions which are seeked based upon the monetary, financial, and legal perspective. Without comprehension over the Hwan-chi-gi remittance, the preparation of measurement against the informal fund transfer refers to a house of cards. Therefore, this article focused on the settlement procedure of the Hwan-chi-gi transactions, not the history, cultural background, or peripheral issues. Finally, the research challenge to find the substances of Hwan-chi-gi transactions to help the seeking practical alternatives of informal fund transfer by revealing the exact volume of Hwan-chi-gi transactions. Specifically, the study examined the (i) settlements by reverse transaction within which Hwan-chi-gi has evolved, (ii) settlements by both and multi-party transactions, (iii) settlements by international trade or service provides, (iv) settlements by investing in the foreign assets, etc. In the transactions world, various levels of transactions are entered and thus upper level transaction aggregations are also discussed as a settlement as well as the outstanding amount due. Reaching to a conclusion, I assert that the entire possible methods were argued in this work as settlement tools under current regulatory and supervisory responses.
Informal funds transfers reduce the reliability of statistical information available to policy-makers. Effectively, this limits the meaning of economic data by underestimating the factors that affect certain economic aggregates, including national accounts. Informal fund transfer transactions can affect the composition of broad money and thus have indirect effects on monetary policy. Thus, policy makers and regulatory authorities should seek appropriate rules to regulate Hwan-chi-gi type remittance system.
Estimating the size of Hwan-chi-gi transactions cannot be undertaken without any reliability. Despite the difficulties of seeking the exact volume of the transactions, certain judgments can be made about the possible dimensions of Hwan-chi-gi, and there are some approaches to quantification that can give indicative results. In this work, in addition to the equation for calculation of the quantity I provide some careful attention to when we estimate the scale of the amount of Hwan-chi-gi transactions.