It was exactly two decades ago, when the pivotal decision was made for the ASEAN economies to come together and pursue regional financial integration. An extensive study on the currency arrangement for ASEAN conducted in 2004 had reached a definitive conclusion – that ASEAN economies should not adopt a monetary union and a single currency. Instead, that ASEAN should pursue regional financial integration.

It is my very great honour to be invited to speak this afternoon on ASEAN regional financial integration in a world that is becoming increasingly multipolar. Our early history shows that regional economic integration in the form of intra-regional trade had already taken place since our ancient times.  And, that this trend has continued over the ages as our region became an important part of the globalisation process in the world economy.

The globalisation of finance is however a more recent 20^th century phenomenon. With it came new formidable challenges.  It was the very insights gained from witnessing the financial turmoil in Europe in the early 1990s – which culminated in their decision for a monetary union in 1999 – and also from the lessons of our own experience during the Asian financial crisis in 1997-1998, that prompted our search for a monetary and financial arrangement for ASEAN.

The ASEAN strategy for financial integration defined by a shared common vision, steadfast conviction and collaborative solidarity, is distinctive and unique. It is based on a model that values flexibility, respects national differences, and that prioritises cooperation and collaboration without rigid institutionalisation.  It thus places emphasis on connectivity and collaboration while accommodating the diversity of member states and respecting the monetary sovereignty of the respective economies.  It has been my privilege to be part of this journey for ASEAN regional financial integration.

From the very beginning, the motivation for pursuing greater regional financial integration was to facilitate the effective intermediation of funds from the region to be reinvested in the region. It was envisaged that this would contribute towards more stable financial flows thereby offsetting destabilising financial flows.  Being high savings economies, it would also facilitate some part of our domestic savings to be reinvested in the region.   Additionally, it would also support the development of domestic financial markets, enhance the overall resilience of regional financial systems and contribute towards the financing of growth and development in the region.

Two decades following this decisive decision to pursue regional financial integration, not only has remarkable progress been achieved, but it has also realised the consequential results that were being envisioned. In essence, it has facilitated increased economic activity, improved access to markets, and reduced transaction costs, and has thus better served the people and businesses in the region.  Most of all, it has also better prepared our economies to respond to the recent external shocks that has confronted the world economy.

The most meaningful achievements can be seen in five major areas. The first involves the gradual regional liberalisation in the financial services sector such as in banking and insurance.  Given our diverse stages of development, this liberalisation is based on the state of readiness so as to avoid any disruptive and destabilising consequences, thereby allowing for its benefits to be realised.  These incremental financial liberalisation efforts have enhanced efficiency, provided greater support for cross-border economic activity, and facilitated businesses to expand beyond their domestic markets.

Following the Asian financial crisis, initiatives were also intensified to develop the domestic bond markets under the Asian Bond Market Initiative (ABMI). Including Korea, Hong Kong and China, this market has grown by more than 20 times in the 20 years to USD26 trillion. This development has enabled businesses to tap into a more stable domestic source of funding, avoid the over concentration of funding from the banking sector and reduce the reliance of funding in foreign currencies.

Thirdly, the payments and settlements, once fragmented across multiple jurisdictions have now become more seamless. Local Currency Settlement Frameworks have made it easier and more cost effective for businesses across the region to trade and invest in their respective local currencies.  Meanwhile, regional payment linkages – including fast payment systems and interoperable QR payments are projected to reach approximately USD1.2 trillion by the end of this year!  Having such a cross border payment system in place has facilitated transactions across ASEAN to be more efficient thus benefiting both consumers and businesses. 

Throughout this journey, efforts have also been directed at ensuring that financial integration does not come at the expense of financial inclusion. ASEAN’s digital financial ecosystem is evolving rapidly, with digital banks and fintech innovations helping to bridge the gap for the unbanked and underbanked. The expansion of digital payments, mobile banking, and alternative financing platforms have now made financial services more accessible, ensuring that the financial integration process benefits the wider population.

ASEAN has also embarked on strengthening the Chiang Mai Initiative Multilateralisation (CMIM), which has fortified further the region’s financial safety net to provide crucial liquidity support in turbulent times and security during tranquil periods. This mechanism reinforces our collective ability to respond swiftly to external shocks and to safeguard our macroeconomic and financial stability. More than just a facility, CMIM is a hallmark of regional cooperation – an assertion of regional solidarity and greater regional financial self-reliance –signaling that the region has the capacity and the political will to stand together in times of stress.

Finally, and equally important is the ongoing commitment and progress achieved in sustainable finance, which sets the stage for the harmonisation in taxonomies to align ASEAN’s financial markets with the global sustainability goals.

These achievements in regional financial integration and cooperation exemplify ASEAN's steadfast commitment to cultivating a robust, inclusive, and resilient financial ecosystem that provides us with the foundation for economic growth. But more importantly, it also paves the way for us to adeptly navigate the current complexities of the global challenges and uncertainties that continue to confront the international financial system and the global economy.

As we gather to reflect on our past and on the potential course for the future, we need to recognise not only the strides that have been achieved but also the recent prevailing major challenges that now need to be overcome. While noting that the consensus-driven essence of ASEAN agreements aims at fostering widespread participation and ownership of the regional initiatives, it has however generally resulted in a more deliberate pace of decision-making. The speed at which the global economic and financial landscape is now rapidly evolving has now heightened the need for priority to be accorded to not only the regional financial integration agenda but to the coordinated management of the recent economic disruptions arising from the global trade shock that has erupted.  This will be a test for ASEAN to rise to the challenge.

Even prior to the recent external shock, the complexity of the current global environment was already being shaped by escalating geopolitical tensions and geoeconomic fragmentation. The shift to a multipolar order, while bringing the potential for greater stability, could undermine the current rules based international system that has underpinned global prosperity. In this context, while ASEAN has always remained neutral, impartial and steadfast to the principles that has governed us thus far – with emphasis on cooperation over confrontation, openness over insularity, and resilience over dependency. Our neutrality is not about detachment – it is about strategic autonomy. It is about being able to engage all parties constructively while remaining grounded in our own interests and values.

ASEAN must therefore shape, and not just adapt to the evolving global financial architecture and environment. The world today is characterised by multiple centres of economic influence, and ASEAN must navigate this shifting landscape with confidence and agility to adjust. While recognising the realities, the region should actively shape the international financial and trade norms to ensure ASEAN’s perspectives and priorities are reflected in the global decision-making.

At the same time, ASEAN is coming from a position of strength. Our internal resilience derived from our economic flexibility to adjust, our more diversified economic structures, and our reformed, restructured and more developed financial systems. Nevertheless, a more cohesive and coordinated approach to the challenges confronting the region needs to be developed. It also needs to be reinforced by fortifying further ASEAN’s financial safety net, the further potential for macroeconomic policy coordination, and improved institutional preparedness for the emerging shocks, which was cumulatively built on trust, driven by innovation and anchored in a shared resilience.

This brings me to what I believe must be our vision for ASEAN economic and financial integration beyond 2025, that is going to be in a dramatically different global landscape. The response by ASEAN in this new shifting terrain will require reinvention and structural adjustments to rise to the new realities.  There is no short-term solution to the challenge before us.  This will not be the first time such economic adjustments need to be undertaken.  This time round however, with the enhanced regional economic and financial integration and networks, the region can leverage upon the relative comparative advantage within the region to address issues of excess capacity, job losses and supply chain disruptions arising from the shock.  Greater reliance on new technologies and AI will also be required.  For this, the best minds that resides in ASEAN and the greater Asia needs to be mobilised to design such a coordinated transformation in the region.

While this vision is entirely within reach, it will, however, require political will, institutional capacity and continued public-private collaboration. It will require investment in digital infrastructure, harmonised regulatory frameworks, and mechanisms that support financial inclusion. Vital will be the continued commitment to regional solidarity toward building a stronger, more secure and more prosperous region.

Ladies and gentlemen,

Let me now conclude my remarks today. Amid renewed global shifts, ASEAN once again finds itself at a crossroad. This time, ASEAN is better prepared. We have built institutions, we have deepened markets, and we have cultivated trust. If we remain true to the spirit that has guided ASEAN through its early years – I am confident that ASEAN can rise to these new challenges and chart its own course in this multipolar world. As we now turn to the panel, with policy makers whom I have had the privilege of working with over the years, I look forward to a rich and forward-looking discussion and their valuable insights into the challenges and opportunities ahead as ASEAN advances on this important journey.

Thank you.