Policy Dialogue between ASEAN Central Bank Governors and CEOs of Financial Institutions

Participants in the Dialogue were Central Bank Governors of the ASEAN countries, the Chairman of the ASEAN Banking Association, representatives of the Banking Associations of the ASEAN member countries, and several international financial institutions. On the side of the SBV, there were representatives of the International Cooperation Department, the Payment Department, and the Monetary Policy Department. The contents of the Dialogue focused on two topics: (i) A new approach to digital banking in the ASEAN region; and (ii) Sustainable banking - its role for ASEAN countries.

Regarding the topic of digital banking, a representative from PwC auditing company stated that in the development trend toward a digital economy, many businesses and traditional banks have been transitioning to digital banking. In this process, data plays a particularly important role in improving productivity, innovating products and making decisions through various forms like machine learning, automation, and other forms of artificial intelligence. The ability to manage and work together to effectively utilize data has also emerged as important factor in the development and success of digital banking, especially when cross-border data flows had grown 148 times between 2005 and 2016, and had helped the global GDP to grow by 10.1%.

The speakers at the Dialogue gave some recommendations on the guiding principles and common criteria for the ASEAN countries to develop frameworks for the governance, connectivity, standards setting and data security protection, as well as appropriate technology solutions to trigger the development potentials of digital banking, develop creative and innovative financial services. On the basis of PwC's interventions, the Central Bank Governors took note of the recommendation on establishing an ASEAN Working Group on Interconnected Data Framework in order to support (i) the development of a common vision and specific objectives for the ASEAN Data Framework Standards and related policies; (ii) exploring opportunities for short-term data connectivity among ASEAN countries; and (iii) building a common roadmap to achieve these goals.

On the topic of sustainable banking, a representative from Ernst & Young auditing company gave a presentation on sustainable banking and its role for ASEAN countries. Currently, the financial sector is transitioning from focusing only on risks and profitability to focusing more on sustainability and the role of the financial system in controlling the impacts of climate change. In addition, the fact that businesses and banks are now considering more about environmental and social factors in the business decision-making process has also created opportunities for businesses to diversify their products and services, such as green loans, social loans, green bonds, social bonds, convertible bonds, sustainability bonds, etc.,, helping with their compliance with the government regulations, increasing their revenues, reducing the portfolio risks, and demonstrating that they are trustworthy and responsible organizations.

Speaking at the Dialogue, the SBV representative acknowledged PwC's recommendations in building an interoperable data framework in the ASEAN region, thereby contributing to strengthening the cooperation and promoting regional digitization. However, given that ASEAN countries have different levels of development and legal frameworks on data protection, privacy, and the conditions for cross-border data movement, the relevant parties need to pay attention to these differences, while developing and agreeing on common standards to ensure interoperability, safety and security in the process of connecting and sharing common data.

Photos of delegates attending the Dialogue

Also on the topic of sustainable banking, the SBV representative shared that in the recent years, the SBV has actively participated in the implementation of the international commitments on sustainable development, reduction of greenhouse gas emissions, and climate change adaptation and mitigation. On the basis of the National Action Plan to implement the 2030 Agenda for the Sustainable Development Goals (SDGs), the SBV has also set out specific targets, tasks and solutions to ensure sustainable development within the banking industry, in order to promote sustainable and inclusive economic growth. Specifically, the SBV has (i) researched, developed and instructed the integration of climate risk assessment when assessing environmental and social risks in the credit institutions' credit extension operations; (ii) implemented credit solutions to support borrowers in the sectors and fields impacted by climate change; (iii) actively participated in the Global Sustainable Banking Network (SBN), especially the contents on climate change management in banking and financial activities.

In the coming time, the SBV will continue to (i) monitor and review the credit policies for agricultural and rural development in order to revise (if necessary) in order to better support the sustainable development of the agricultural sector in accordance with the Agriculture Restructure Plan for the period of 2021-2025; (ii) accelerate the implementation of specific credit programs and policies in the agriculture and rural sectors; and (iii) direct credit institutions to develop a diversified range of bank credit products suitable to people and businesses operating in the agriculture sector and in rural areas.

In order to promote the central banks' role in the climate change responses, the SBV suggested that the ASEAN Central Banks coordinate with other regulators in the financial and monetary sector, as well as other relevant sectors to develop solutions to focus resources and provide more credit for projects that promote energy efficiency; the development of clean and renewable energy; use of environmentally friendly technologies and equipment. While still maintaining control of the extension of credit to sectors and fields that may adversely affect the environment in order to minimize the impacts of climate change.

VA