ASEAN 2020: ASEAN Finance and Banking Cooperation Process achieved important progress

Following the ASEAN 2020 theme of "A Cohesive and Responsive ASEAN", the SBV and the MOF have proposed two priority initiatives, namely "Sustainable finance in ASEAN" and "Promoting regional payment connectivity".

Promoting intra-regional integration, economic and financial connectivity

Sharing at the press conference, MOF Minister Dinh Tien Dzung said that the ASEAN Central Bank Governors and Finance Ministers had welcomed Vietnam's initiatives in continuing to realize the goals of promoting intra-regional economic and financial integration and connectivity, deepening the region's cohesion with the international community for sustainable development, while enhancing ASEAN's adaptive capabilities and institutional capacity. As for the outcomes, the AFMGM had endorsed the "Report on Promoting Sustainable Finance in ASEAN" and the “Implementing Policy Guidelines (IPG) of the ASEAN Payments Policy Framework for Cross-Border Real-Time Retail Payments”, together with its annexes.

Discussing the regional economic situation, Minister Dinh Tien Dzung informed that despite the significant impacts caused by the Covid-19 pandemic, the initiatives on financial integration and cooperation within ASEAN are still being implemented on schedule by the Working Committees. ASEAN Finance Ministers and Central Bank Governors had listened to the report and commended the results achieved in the areas of financial integration and liberalization, trade and investment facilitation, financing, payment and service connectivity, infrastructure financing, sustainable finance, financial inclusion, as well as disaster risk financing.

ASEAN Finance Ministers and Central Bank Governors also reaffirmed their commitments to the continuous flows of goods and services and believed that solidarity and cooperation are the keys to helping ASEAN win the fight against the pandemic and restore the regional growth. In addition, they also committed to continue implementing the priorities for policy cooperation and coordination among countries in the region, and between the region and the international financial institutions to promote sustainable economic growth and to enhance ASEAN regional financial stability.

Overview of the press conference after the 6th AFMGM in Hanoi

Prior to the 6th AFMGM, as the host for the banking cooperation events during ASEAN 2020, the SBV had chaired the 16th ASEAN Central Bank Governors’ Meeting (ACGM) and the Policy Dialogue Session with the major international organizations and more than 30 Chief Executive Officers (CEOs) of ASEAN commercial banks. In informing the ACGM’s outcomes, SBV Governor Le Minh Hung said “the ASEAN's financial-banking sector has been working closely with one another to maintain its competitiveness and resilience in the wake of various uncertainties in the world economy. During the meetings of ASEAN Central Bank Governors and Finance Ministers as well as the policy dialogue sessions with our partners, we all agreed that the world and regional economies are experiencing heavy impacts caused by the Covid-19 pandemic.”

According to the ADB’s forecast, most of ASEAN countries are expected to have negative growths, from -1% to - 8%, in 2020; except for 3 countries with low positive growths, from 1.4% to 1.8%, including Vietnam. Nonetheless, there have appeared some optimistic signals when the international organizations all believed that positive growths would return to ASEAN in 2021, ranging from 3% to 6.5%, in which, Vietnam is forecast by the ADB to grow at 6.3% in 2021.

The Meetings also affirmed the role of the ASEAN Central Banks and the Finance Ministries in the joint efforts to reduce the impacts of the pandemic on the region and to restore the economy. The prompt and effective implementation of the monetary and fiscal solution packages has affirmed the strong determination of ASEAN Central Banks and the Finance Ministries in achieving the common targets of mitigating the pandemic impacts, ensuring stability and supporting economic development. The aforementioned policy solutions have been implemented in line with the general spirit of the ASEAN Chair's Statement issued on February 14, 2020.

The Governors and Ministers had also pledged to continue to promote the financial and monetary integration in the region. In spite of the heavy impacts caused by the Covid-19 pandemic, the ASEAN Finance and Banking Cooperation Process has still made a strong progress. The Working Committees on finance - banking cooperation have basically ensured the implementation on schedule, and have achieved the set strategic targets as well as the requirements for the Committees’ performance indicators.

Promoting digital transformation in the banking sector

At the 16th ACGM, ASEAN Central Bank Governors held a Policy Dialogue Session with the representatives of the Bank for International Settlements (BIS), the CEOs of ASEAN commercial banks, and the ASEAN Banking Associations on the topic of promoting digital transformation in the banking sector.

According to SBV Governor Le Minh Hung, 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 is not an option anymore, but has become an inevitable trend, a mandatory requirement in the context of strong digitization of the service industries as well as the presence of digital application in all aspects of socio-economic life”, the SBV Governor stressed.

SBV Governor Le Minh Hung mentioned that the digital transformation of the banking sector in ASEAN has become an inevitable trend

On the topic of Central Bank Digital Currencies (CBDC), the SBV Governor said that, according to BIS's assessment, 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. These are useful and valuable updates for ASEAN Central Banks and Monetary Authorities for their research on this new field.

The Central Bank Governors and commercial banks’ CEOs all agreed that the Covid-19 pandemic has been causing many serious consequences to the regional economies; however, from a certain point of view, the difficulties caused by the pandemic are becoming the driving force for digital transformation and technological innovations in the banking sector. The application of technology in the financial sector will be the leading solution for promoting financial inclusion as well as helping to minimize direct contact during outbreaks. In addition, the ASEAN Central Bank Governors had also shared more information about their views on the fiscal - monetary policy management in the current period. For example, from the perspective of monetary policy management, it is necessary to issue solutions to support the economy, minimize the negative impacts caused by Covid-19 on the economy; but as a monetary authority, it is also necessary to make room for post-pandemic economic recovery, continue to maintain safe and sustainable operations of the banking system. The goal is to provide support for impact mitigation, while still maintain the policy framework to be able to deal with post-pandemic issues when the economy recovers.

Sharing more about the post Covid-19 exchange rate and foreign exchange management policy, the SBV Governor said that the SBV’s viewpoint of the management of the monetary policies, including the exchange rate policy, is to control the inflation and maintain the macro-economic stability, facilitating a favorable environment to support sustainable economic growth in the medium and long term. “The SBV has never used and will never use the monetary policy tools, including the exchange rates, to create unfair competitive advantages in commercial and international transactions. That viewpoint will continue to be the key in the SBV’s administration in the coming time, including maintaining stable exchange rates to ensure a stable macro framework for post-pandemic sustainable economic development” - the SBV Governor affirmed.

Implementation of initiatives in the ASEAN Finance and Banking Cooperation Process

Sharing at the press conference about the focus and results achieved in the cooperation process of ASEAN Central Banks in 2020, SBV Deputy Governor Nguyen Thi Hong affirmed that despite the heavy impacts of the Covid-19 pandemic, the ASEAN Finance and Banking Cooperation Process are still following closely the goals set out in the ASEAN Economic Community Blueprint 2020. The ASEAN Central Banks have been cooperating through six Working Committees on financial-banking cooperation, and have basically ensured the implementation on schedule, achieving the set strategic goals as well as the requirements for the Committees’ performance indicators.

Especially, in 2020, the ASEAN Central Banks have regularly exchanged with one another and assessed the impacts of the Covid-19 pandemic on the world economy as well as the regional economic and financial state through virtual meetings and seminars with the participation of the international financial institutions. Thereby, the Central Banks have proposed multiple solutions and policies to enhance the resilience to shocks of the financial and monetary systems in the region.

In addition, within the ASEAN Finance and Banking Cooperation Process, the Central Banks have shown continuous attention to the current world issues, such as environmental issues, climate change, etc. The ASEAN Central Banks had initiated a Report on the Role of the ASEAN Central Banks in Managing Climate and Environmental Risks. “The ASEAN Central Banks have coordinated and finalized this Report within the framework of the AFMGM 2020 in Vietnam. The Governors and Ministers have adopted the Report and laid out a roadmap to disclose it, as well as to share the information in the Report with the international institutions”, the SBV Deputy Governor shared.

SBV Deputy Governor Nguyen Thi Hong: "Promoting regional payment connectivity" is one of the priority initiatives that the SBV has registered at the national level for the economic pillar in ASEAN 2020.

The 6th AFMGM also 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 will help to define the structure, scope of work, activities, and mechanisms for the information sharing and data governance among ASEAN members; 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.

Regarding the regional payment connectivity, the 6th AFMGM have adopted the “Implementing Policy Guidelines (IPG) of the ASEAN Payments Policy Framework for Cross-Border Real-Time Retail Payments” together with its annexes. This is one of the 13 priority initiatives that the SBV has registered at the national level for the economic pillar in ASEAN 2020. SBV Deputy Governor Nguyen Thi Hong added that “Currently, most of ASEAN member states have deployed (the Guidelines) from a bilateral perspective. For Vietnam, the SBV has been cooperating with the Bank of Thailand to establish a working group in order to conduct a pilot project on Real-Time Retail Payments based on a compatible QR code-engineering platform.”

With a high consensus, the ASEAN Finance Ministers and Central Bank Governors adopted the Joint Statement of the 6th AFMGM. The Delegates all agreed that the 6th AFMGM under the chair of Vietnam had been successfully organized. The ASEAN Members expressed high appreciation for the organization and the leadership of Vietnam in ASEAN 2020, and hoped that the 7th AFMGM in 2021 would also be successfully organized under the chair of Brunei Darussalam.

VA