The Bangko Sentral ng Pilipinas (BSP) recently joined the central banks of Indonesia, Malaysia, Singapore, and Thailand in a regional call for cooperation on payment connectivity to support faster, cheaper, more transparent, and more inclusive cross-border payments.
The Memorandum of Understanding (MOU) on Cooperation in Regional Payment Connectivity (RPC) was signed on the sidelines of the G20 Leaders’ Summit held in Bali, Indonesia recently.
Forged between the BSP, Bank Indonesia (BI), Bank Negara Malaysia (BNM), Monetary Authority of Singapore (MAS), and the Bank of Thailand (BOT), the MOU was meant to help strengthen and enhance joint collaborative efforts in the region in addressing global challenges.
In a press statement, Perry Warjiyo, governor of Bank Indonesia, explained, “The MOU serves as a significant milestone in paving the road for advancing cross-border payment connectivity. The 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 as well as leadership in implementing cross-border payment connectivity.”
Nor Shamsiah Yunus, the governor of Bank Negara Malaysia, added, “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.”
For his part, Ravi Menon, Managing Director of the Monetary Authority of Singapore, said, “This MOU underscores ASEAN’s commitment to achieving 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.”
And last but not least, Deputy Governor Mamerto E. Tangonan of the BSP, who represented BSP Governor Felipe M. Medalla, said, “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.”
“This MOU concretizes our collaborative and inclusive approach to enhancing cross-border payments in the ASEAN region that will translate into efficiency gains and cost-savings in various international financial transactions and economic activities,” he concluded.
Accelerating economic recovery, promoting inclusive growth
During his remarks at the signing ceremony, Indonesian president Joko Widodo emphasized the importance of taking concrete actions to accelerate economic recovery and promote inclusive growth in the region.
President Widodo 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. He said that this cooperation would be a significant contributor to accelerating regional economic recovery and promoting inclusive growth.
According to the MOU, the implementation of cross-border payments connectivity will serve 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.
“It will dovetail ASEAN members’ current network of bilateral cross-border payment linkages and will serve as a basis for multilateral collaboration in the future. Furthermore, enhancing regional payment connectivity will pave the way for ASEAN’s digital transformation and deepen financial integration in the region,” the MOU read.
“This is particularly beneficial for small and medium-scale enterprises as it will help facilitate their participation in international markets. The cooperation will also include a number of modalities, including QR code and fast payment,” it added.
Roadmap for enhancing cross-border payments
Accelerating economic and financial digitalization has become a global initiative, with this year’s G20 Summit 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 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.
In the future, the payment connectivity initiative may be expanded to include other countries in the region and potentially, in other partner countries outside the region. The milestone (signing of MOU) also marks the start of Indonesia’s chairmanship of the Association of Southeast Asian Nations in 2023.