On October 2, 2020 morning, at the International Conference Center, the 16th ASEAN Central Bank Governors Meeting (ACGM) was held virtually under the chairmanship of Governor Le Minh Hung of the State Bank of Vietnam (SBV).
SBV Governor Le Minh Hung presides over the 16th ASEAN Central Bank Governors’ Meeting
The delegates in the meeting came from the Central Banks, the Monetary Authorities of 10 ASEAN member countries, representatives of the ASEAN Secretariat, along with the dialogue partners from the Bank for International Settlements (BIS), and the Chief Executive Officers (CEOs) of various banking and financial institutions in the region.
The Meeting consisted of two discussion sessions: (i) Policy dialogue on promoting digital transformation in the ASEAN banking sector, and (ii) ASEAN 2025 Financial and Banking Integration Process.
Promoting digital transformation in the ASEAN banking sector
During the policy dialogue on promoting digital transformation in the ASEAN banking sector, the speakers presented on current topics related to the banking operations within ASEAN, namely: (i) Digital transformation for banking - financial services in the countries as well as transforming the traditional financial - banking industry to adapt to and overcome the challenges posed by the fourth industrial revolution; (ii) Central Bank Digital Currencies (CBDC) - current situation and policy implications; and (iii) Some valuable information, experience and lessons learnt on the application of breakthrough technologies and the development of innovative business models in ASEAN banking operations.
On the topic of CBDC, most of the countries in the world are still in the research stage, while a few countries have started with the testing on a narrow scope. At the Meeting, the BIS provided a relatively in-depth perspective on the research and choice of the CBDC model. Besides, there were also recommendations to ensure the financial stability, and to protect the customers, maintaining the trust and the network integrity during the designing and utilization of CBDC. These are useful and valuable updates for ASEAN Central Banks and Monetary Authorities in general for their research on this new field in particular.
Photos of the ASEAN Central Bank Governors and ASEAN Secretariat attending the virtual Meeting (screenshot)
On the topic of digital transformation in the banking sector, the ASEAN region in general and Vietnam in particular have high economic growth rates, young population structure, the people are quite open-minded and eager for digital applications. At the Meeting, the Governors and the CEOs all agreed that the digital transformation of the banking sector in ASEAN has become an inevitable trend. Following that trend, several ASEAN member countries have developed and issued digital transformation strategies in the banking and finance sector.
At the 16th ACGM, the Bank of Thailand (BOT) gave a presentation on the BOT’s plan to transform Thailand’s banking and finance sector. The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) gave a presentation on Vietcombank's digital transformation program towards becoming a prestigious financial institution in the region with outstanding digital capabilities, inepth understanding and close relations with their clients, while building an innovative, adaptive and sustainable business model in the context of the 4th industrial revolution.
ASEAN 2025 Financial and Banking Integration Process
The Meeting continued to discuss on the priorities and initiatives in the framework of the ASEAN finance and banking cooperation process towards promoting joint efforts to build an efficient and sustainable ASEAN banking system. Regarding the initiatives to accelerate the banking sector integration, the Central Bank Governors made high evaluation for the achievements of ASEAN in the banking and finance sector in recent years, notably:
Promoting financial inclusion: Through the activities of the ASEAN Working Committee on Financial Inclusion (WC-FINC), the guidelines on digital finance have been released to improve the people's access to finance, contributing towards inclusive development goals, ensuring that no one is left behind.
Banking integration: Promoting the knowledge sharing on banking inspection and supervision; implementing the international standards; developing guidelines as well as the signing of ASEAN Banking Integration Framework (ABIF) Arrangements.
Cybersecurity in ASEAN: Establishing a Platform to share information on cybersecurity among ASEAN Central Banks.
Regional payment connectivity: Promoting cross-border payments within ASEAN to accelerate the integration of real-time retail payment systems (RT-RPS) through guidelines for the implementation of the ASEAN Payments Policy Framework and the appendices applied for the RT-RPS, and on a compatible QR code-engineering platform. This is one of the 13 priority initiatives that the SBV has registered at the national level for the economic pillar in ASEAN 2020.
Sustainable finance: The SBV came up with an initiative to develop a Code of Conduct for sustainable banking in ASEAN, and urged the relevant parties to finalize the Reports on the role of the ASEAN Central Banks in managing climate and environmental risks.
Capital account liberalization: Finalizing the Guiding Principles on the Local Currency Settlement Framework in ASEAN, which was completed by the Working Group in 2019. This Framework aims to reduce the region's dependence on the US dollar while strengthening the regional linkages and minimizing risks related to trade and investment in the region.
Representatives of the SBV attending the Meeting
At the meeting, the ASEAN Central Bank Governors adopted several initiatives, in particular:
(i) On the sustainable banking agenda, the Meeting adopted the Report on the Role of ASEAN Central Banks in climate and environmental risk management, and also agreed to share this Report with the Network for Greening the Financial System (NGFS) to highlight the collective efforts and commitments of ASEAN Central Banks in enhancing understanding and managing climate and environmental risks. In addition, the Meeting agreed to issue a separate Communiqué on the ASEAN Sustainable Banking Agenda and the Joint Statement of the 6th ASEAN Finance Ministers' and Central Bank Governors' Meeting (AFMGM).
(ii) In further relation to sustainable banking, the Meeting agreed to initiate the development of an ASEAN's Code of Conduct for Sustainable Banking in order to provide guidance for the relevant policies and commitments of ASEAN Central Banks in the future on promoting sustainable banking. This initiative was brought up by the SBV, as the Chair of ACGM 2020, and received a high consensus among the Governors.
(iii) Regarding the Cybersecurity Risk Information Sharing Program (CRISP), the Meeting adopted the Terms of Reference and the Signing of a Memorandum of Understanding on Information Sharing for the operations of the ASEAN’s Cybersecurity Risk Information Sharing Program. Those principle-setting documents help to define the structure, scope of work, activities, and mechanisms for the information sharing and data governance among ASEAN members. In the context that technologies are more and more deeply into the financial sector, which had led to unpredictable non-traditional security threats, this initiative can help to create a platform for regular information exchanges and updates among IT experts from the ASEAN Central Banks and Monetary Authorities, thereby ensuring the network information integrity, financial information integrity and ultimately helping to ensure the safety of financial and banking operations in the countries as well as in the whole region.
According to the schedule, on the same day (October 2, 2020), the 6th ASEAN Finance Ministers’ and Central Bank Governors’ Meeting would be held virtually at the International Conference Center.
VA