Central banks from five members of the Association of Southeast Asian Nations (Asean), including the Bangko Sentral ng Pilipinas (BSP), have agreed “to strengthen and enhance cooperation on payment connectivity to support faster, cheaper, more transparent, and more inclusive cross-border payments.”
BSP, Bank Indonesia (BI), Bank Negara Malaysia (BNM), Monetary Authority of Singapore (MAS) and Bank of Thailand (BOT) yesterday signed a Memorandum of Understanding (MOU) on Cooperation in Regional Payment Connectivity (RPC) in Bali, Indonesia, on the sidelines of the G20 Leaders’ Summit with keynote address from Indonesian President Joko Widodo.
“The more we recognize how interdependent our economies are, the more we need to be deliberate in our pursuit of the vision of an interconnected Asean region,” said Mamerto Tangonan, BSP deputy governor who represented BSP Governor Felipe Medalla.
“This MOU concretizes our collaborative and inclusive approach to enhancing cross-border payments in the Asean that will translate into efficiency gains and cost savings in various international financial transactions and economic activities,” Tangonan said.
Widodo, during his remarks, emphasized the “importance of concrete joint collaborative action in addressing global challenges.”
He also expressed his highest appreciation to the governors of the five central banks for their commitment to delivering innovative breakthroughs that will further accelerate regional payment connectivity.
Perry Warjiyo, BI governor, said the MOU “serves as a significant milestone in paving the road for advancing cross-border payment connectivity.”
“Existing bilateral payment connectivity arrangements will be expanded as part of the region’s efforts to strengthen its economic integration. Such collaboration among central banks is key to accelerating economic recovery. We hope that other countries will follow this good example and leadership in implementing cross-border payment connectivity,” Warjiyo said.
Nor Shamsiah Yunus, BNM governor, said the initiative underscores the importance of central bank collaboration in supporting the development of next-generation payment connectivity.
“Realizing the vision of an Asean regional network of fast and efficient cross-border payment systems will advance our digital ambitions and further deepen financial integration for the benefit of the region’s economic development,” Yunus said.
Ravi Menon, managing director of MAS, said the MOU underscores Asean’s commitment to achieve regional payments interoperability and connectivity by 2025 “to enable cheaper, faster, and more transparent cross-border payments.”
“Asean’s effort is aligned with the G20’s goal of addressing existing frictions in global cross-border payments, creating new business opportunities and enabling inclusive growth,” Menon said.
Deputy Governor Ronadol Numnonda of the BOT, who represented BOT Governor Sethaput Suthiwartnarueput, emphasized that the Asean region “has now become a global hotspot in cross-border payments linkages.”
“Building on our previous efforts, this MOU marks another milestone in our Asean Payment Connectivity initiative in working together to address the long-standing pain points in cross-border payments. It also dovetails Asean members’ current network of bilateral cross-border payment linkages and will serve as a basis for multilateral collaboration going forward. Further enhancing regional payment connectivity will pave the way for Asean’s digital transformation and deepen financial integration in the region,” Numnonda said.
The RPC is expected to be a significant contributor to accelerating regional economic recovery and promoting inclusive growth.
The implementation of cross-border payment connectivity serves to support and facilitate cross-border trade, investment, financial deepening, remittance, tourism and other economic activities, as well as a more inclusive financial ecosystem in the region.
This is particularly beneficial for micro, small and medium enterprises as it will facilitate their participation in international markets. The cooperation will include a number of modalities, including QR code and fast payment.
Accelerating economic and financial digitalization has become a global initiative with the G20 establishing its Roadmap for Enhancing Cross Border Payments.
The cooperation initiative is also in line with Indonesia’s G20 Presidency priority agenda in the area of digital transformation, including through payment systems in the digital era, manifested by the joint efforts to pursue enhanced cross-border payment connectivity involving Indonesia, Malaysia, Philippines, Singapore and Thailand.
The five central banks stressed that this payment connectivity initiative could be expanded to include other countries in the region and potentially other partner countries outside the region.
This joint collaboration also supports Asean’s shared aspiration for connected payment systems that will enable fast, seamless and more affordable cross-border payments across the region.
In line with Asean’s pragmatic approach to deepen integration through mutually beneficial arrangements based on the level of readiness, this initiative provides the building blocks for wider Asean participation in the near future, thereby fostering stronger regional economic ties.