ASEAN+3 finance, central bank chiefs vow stronger regional ties amid shocks

FINANCE MINISTERS and central bank governors of the Association of Southeast Asian Nations Plus Three (ASEAN+3) have pledged to tighten regional cooperation as the energy crisis brought by the Middle East war continues to test the region’s resilience.

The officials said the war-driven global oil shock will weaken the region’s growth and push prices up, with “broader and more persistent” effects seen as the crisis drags on.

“Against this backdrop, we underscore the importance of upholding multilateralism and strengthening regional unity and cooperation in addressing shared challenges and heightened uncertainty,” they said in a joint statement released late on Sunday.

“We strongly reaffirm our commitment to sustained policy dialogue to safeguard macroeconomic and financial stability.”

Among the initiatives being pushed by ASEAN+3 economic managers is the issuance of the Updated Strategic Direction of the ASEAN+3 Finance Process, which includes improving the Chiang Mai Initiative Multilateralization (CMIM).

BSP Governor Eli M. Remolona, Jr. earlier said they are working with ASEAN leaders on expanding and enhancing the CMIM as the region’s financial safety net amid the Middle East war.

The CMIM, established by ASEAN+3 countries after the 1997 Asian Financial Crisis, is a multilateral currency swap arrangement within the region designed to address crisis-driven liquidity concerns.

ASEAN+3 is made up of the Philippines, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, Timor-Leste, and Vietnam, plus China, Japan, and South Korea.

PAYMENT LINKAGES
Meanwhile, the ASEAN+3 Macroeconomic Research Office (AMRO) said the region must establish stronger intra- and inter-regional payment linkages to help address gaps in traditional cross-border payment systems.

“The inefficiencies of traditional cross-border payments due to reliance on multiple intermediaries and legacy infrastructure underscore the value of stronger intra- and inter-regional connectivity,” it said.

According to AMRO, the Asia-Pacific region still lags behind global averages in terms of processing wholesale payments.

Some 25.6% of wholesale payments are credited within an hour of initiation and 84.6% within one working day, it said, slower than the global rate of 54.6% within one hour and 93.2% within a day.

“Progress in the region is stagnant largely due to friction in the beneficiary leg, i.e. the final stage of the payment process where the receiving bank credits the recipient’s account,” AMRO said.

Retail payments costs, especially for person-to-person transactions, also remain high in the East Asia and Pacific region, it added.

“Over the past couple of years, the speed of transfer has improved notably for banks and mobile wallets, as a larger share of payments are transferred within an hour, but banks still lag behind in transparency as compared to card and mobile wallet payments.”

AMRO said fast and efficient retail and wholesale payment linkages are essential in deepening economic and financial integration, both within the region and across the world, especially amid growing geopolitical risks and global fragmentation.

“Fast and efficient payment systems are the basic building blocks for strong financial links. Advancements in retail payments help tourists, migrant workers, and e-commerce/small businesses by making cross-border payments cheaper and more accessible across different sections of society,” it said. “On the other hand, as the region grows and corporations increasingly internationalize, the need for advancements in wholesale payments will be critical in enabling cross-border bank payments and managing multi-currency liquidity efficiently, which could pave the way for broader capital market integration.”

“For ASEAN+3, which is deeply dependent on trade and cross-border capital flows, this raises the importance of strengthening cross-border payment connectivity to be more resilient to geopolitical spillovers. At the same time, regional initiatives should complement — not replace — global integration.” — Katherine K. Chan