On March 30, 2021, Deputy Governor Nguyen Kim Anh of the State Bank of Vietnam (SBV) attended the virtual 17th ASEAN Central Bank Governors’ Meeting (ACGM). This was an important event within the framework of the 2021 ASEAN Summit hosted by Brunei Darussalam.
The delegates in the Meeting came from the Central Banks, the Monetary Authorities of 10 ASEAN member countries, representatives of the ASEAN Secretariat. The Meeting consisted of two discussion sessions: (i) ASEAN 2025 Financial and Banking Integration Process; (ii) Issues arising during the Policy Dialogue between ASEAN Central Bank Governors and CEOs of Financial Institutions in the region with the theme of "Digitalization and Sustainability: Changing the Landscape of Financial Services in the ASEAN Region".
ASEAN 2025 Financial and Banking Integration Process
In the context of the current complicated situation of the COVID-19 pandemic, the Governors regretted being unable to meet face-to-face for two consecutive years to discuss and share about the regional financial and banking integration process. Despite the difficult circumstances, the Governors highly appreciated the Working Committees' efforts in actively coordinating and effectively implementing the proposed initiatives.
This year's Meeting focused on discussion of the priorities and initiatives in the framework of the ASEAN Financial and Banking Integration Process, which aims to promote joint efforts to build an integrated, connected, efficient and sustainable ASEAN banking system.
On behalf of the SBV's Board of Management, Deputy Governor Nguyen Kim Anh spoke highly of ASEAN's achievements in the banking and finance sector in recent years, with outstanding highlights as follows:
Banking integration: The Working Committee on ASEAN Banking Integration Framework (WC-ABIF) has completed the signing of 03 ASEAN Banking Integration Agreements, as well as the establishment of 02 Qualified ASEAN Banks (QAB). The Working Committee has finalized the important recommendations for the Crisis Management, Resolution, and Recovery (CMRR) Framework, and has worked towards finalizing a roadmap to enhance transparency, standardization and cohesion of banking regulations among ASEAN countries.
Regional payment connectivity: Enhancing real-time cross-border retail payment connection among ASEAN countries through the issuance of guiding documents on the principles for the implementation and connections, as well as several bilateral agreements on enhancing interconnectivity using QR code-engineering platform.
Sustainable banking: The ASEAN Senior Level Committee on Financial Integration (SLC) has directed the technical level to continue developing the Code of Conduct for sustainable banking in ASEAN based on an initiative proposed by the SBV in 2020; and urged the relevant parties to finalize the Reports on the role of the ASEAN Central Banks in managing climate and environmental risks.
Photos of the ASEAN Central Bank Governors and ASEAN Secretariat attending the virtual Meeting (screenshot)
Capital account liberalization: Finalizing the Guiding Principles on the Local Currency Settlement Framework in ASEAN, which was formulated by the Working Committee 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.
Mechanism of coordination for ASEAN sustainable finance: Under the direction of the ASEAN Finance Ministers and Central Bank Governors, the Working Committee for Capital Market Development (WC-CMD), the ASEAN Capital Markets Forum (ACMF), and the ASEAN Insurance Regulators Meeting (AIRM) jointly proposed a coordination mechanism to the SLC. This mechanism is expected to engage the participation and collaboration of all ASEAN Finance Ministries and Central Banks, along with commercial banks, investors, etc. The initiative will be reported to the Finance Ministers and the Central Bank Governors at the 7th ASEAN Finance Ministers’ and Central Bank Governors’ Meeting for approval.
Regarding the initiatives discussed at the Meeting, SBV Deputy Governor Nguyen Kim Anh welcomed and highly appreciated the efforts of the SLC Co-Chair and the Working Committees in the timely and effective implementation of the cooperation initiatives. In addition, the SBV also supported the adoption of Working Committees’ initiatives, including: (i) the initiative on ASEAN Sustainable Banking Principles; (ii) Terms of Reference for the SLC’s Task Force on Sustainable Finance (TF); and (iii) the Policy Brief on ASEAN Capital Account Safeguard Measures. The SBV Deputy Governor suggested that the Working Committees continue their efforts to develop more research and guidance on: (i) digitization and its impacts on the banking integration process, in order to provide the regional banking sector with appropriate orientations for the operations and development in the future; and (ii) Payment connectivity via QR Code through bilateral and multilateral agreements in the region.
Policy Dialogue between ASEAN Central Bank Governors and CEOs of Financial Institutions
In addition, within the framework of the Meeting, Brunei, as the host country, made a brief report on the outcomes of the Policy Dialogue between ASEAN Central Bank Governors and CEOs of Financial Institutions on topics such as (i) digital banking; and (ii) sustainable banking in the ASEAN region.
On digital banking, speakers from international financial institutions emphasized the role of data transformation in ASEAN's digital banking operations. At current rate, digital technology is likely to contribute an additional 1 trillion USD to the regional GDP and could be valued at as much as 625 billion USD within the next decade. Strengthening cooperation in data inter-connectivity in the region will actively support: (i) the process of developing creative and innovative products/services for those who are not yet fully served; (ii) business decision-making; (iii) enhancing transparency; and (iv) improving efficiency and compliance in fighting money laundering and terrorist financing. However, in order to do this, it is necessary to build a common data framework for the region, including criteria, principles and standards of connection, information safety and security; developing a specialized working committee and establishing common technology solutions and platforms.
On the topic of sustainable banking, the speakers gave presentations on the new financial landscape that is shifting to focus more on the sustainability of the financial system, including the role of the financial system in response to climate change; trends and factors driving sustainable banking; as well as the countries’ benefits resulted from this transition. In the coming time, the speakers proposed some recommendations for the cooperation of all parties in the ASEAN region to jointly seize opportunities from a sustainable finance/banking system.
VA