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SWIFT's role in supporting financial intergration in ASEAN, Usama DeLorenzo, SWIFT

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  • 1. Financial Integration Public Affairs and Communications Asia Policy June 2014
  • 2. 2 Regionalization Recent developments MOU with ETDA Standards Capacity Building Programme Theory of Optimum Financial Areas (SWIFT Institute) Asia Pacific Finance Forum (Public Private Initiative) ASEAN PSS Cooperation Workshops World Bank Regionalization Guidelines Theory of Optimum Financial Areas CPSS-IOSCO Principles for FMIs Tools for policy makers SWIFT supports 20/30 global regionalization projects ASEAN ISO 20022 ABMF WC-PSS Brunei ASEAN’s First RTGS
  • 3. ACMF 3 ASEAN Integration Focal Areas ECONOMIC AEC ASP ABMI AFTA CMIM APG - AML ASEAN Link RIA-Fin
  • 4. Economic v. Financial Integration Drivers and benefits Enhanced productivity Comparative advantage Economies of Scale Increased Trade Political Alignment Avoidance of war Economic The engine of economic integration Risk management and mitigation Better governance Transparency Reduction in transactional costs Common settlement mechanism Financial 4 Overarching Economic Concerns The nuts and bolts of economic integration
  • 5. ASEAN’s Working Level Objectives ASEAN’s Components of High Level Objectives ASEAN’s High Level Objective Economic Community Financial Integration Financial Infrastructure Regulatory Harmony Economic Integration Capital accounts, trade barriers, etc 5 Where we fit in to the regional integration agenda…
  • 6. TECHNICAL SUBSTRUCTURE Technology Standards Communication Standards Security and Resilience Computing and Protocols Interoperability is not enough. Automation is the goal. STP is ideal. 1. What needs to be addressed? 2. What are regulators looking for? 3. What’s required for FMIs? 4. What about SMEs?
  • 7. 7 Security Investor Protection Safe Markets Reputational and Business Risk Transparency Legal Basis Governance Disclosure Business Risk Market Access Technological Access Participation Requirements FMI Links Comm Protocols and Standards Resilience Operational Risk Efficiency Comm Protocols and Standards Efficiency Cost Savings Less Errors Building Capacity
  • 8. 8 So, what then does the environment look like today? What is the ideal environment?
  • 9. 9 Differing Systems
  • 10. 10 Convergent Systems
  • 11. Developmental support: Lessons learned from global regionalization projects Regionalization Communication Regional Market Practices Collaboration 11 Someone at the helm, coordinating and leading. Established delineation between collaborative and competitive spaces. Clear documentation on how to access the technical substructure of regional markets.
  • 12. Technical Assistance Capacity Building Identification of gaps Definition of market practices 12 Regional Payments ECP Chairman IPFA Chairman SWIFT Standards Indonesia Vietnam Myanmar Thailand Philippines Cambodia Malaysia Brunei Indonesia Vietnam Myanmar Thailand Philippines Cambodia Malaysia Lao PDR Market Guides SWIFT in ASEAN WCPSS Survey
  • 13. 13 ASEAN PSS Cooperation Workshops WCPSS National Bank Associations ASEAN Bankers Association SWIFT Task Force on Standardization BoT ETDA ASEAN Experts Regional Bank(s) General experiences and implementation challenges. Support on Standards and global perspectives and lessons learned. Leading coordination of workshops. Coordinating workshops at national level and co-host. Perspective at a national level – experience of payments, trade and securities integration. Led to WCPSS choosing ISO 20022 for ASEAN regional payments. Central Banks Co-host and supporter of workshops and providing guidance for national market. Cooperation in Payments
  • 14. 14 World Bank Regionalization Guidelines Theory of Optimum Financial Areas CPSS-IOSCO Principles for FMIs Tools for policy makers
  • 15. Why these tools are important Optimum Financial Areas • Macroeconomic issues • Allusion to technical aspects World Bank Regionalization GLs • Financial Market Architecture • Regional view, domestic focus • Touches on technical CPSS-IOSCO PFMI • Financial Market Infrastructure • Domestic focus • Technical nature 15
  • 16. MoU with Thailand ETDA In ASEAN and Domestic markets: SWIFT and ETDA cooperate in the arena of standardization and connectivity for: – Corporate to Bank – Bank to Bank – Securities 16
  • 17. 17 ASEAN ISO 20022 ABMF WC-PSS Brunei ASEAN’s First ISO RTGS SWIFT is the official secretariat for Market Guide maintenance Conducted technical workshops for WC-PSS, assisted with Survey and currently working on identifying gaps for payments integration Brunei will be Asia’s first market to build an RTGS on ISO 20022 Standards capacity building program on ISO 20022 for FMIs – 2013 ASEAN Bonds and Payments both elect ISO 20022
  • 18. Asia Pacific Financial Forum • Public Private Partnership • Recommendations to APEC finance ministers • SWIFT is founding member and heavily involved to represent the interests of the global financial community 18 Insurance and retirement income Trade finance Lending infrastructure Financial market infrastructure & cross- border practices Capital markets Areas of focus for APFF
  • 19. 19 Thank you