Building the rails of tomorrow
Asean has made remarkable progress in modernising its payment systems. Fast payment systems (FPS) are now linked across several of the region’s largest economies. The first real-time linkage between Thailand’s PromptPay and Singapore’s PayNow in 2021 reduced transfer times from days to seconds and cut costs dramatically. Similar connections now link Cambodia, Indonesia, Lao PDR, Malaysia, and Vietnam, covering most of the region’s cross-border flows.
For economies where tourism contributes a sizeable share of GDP, the impact is immediate. Seamless small-value transactions — enabled by interoperable QR code systems — make travel and retail spending more efficient. Under the Asean Regional Payment Connectivity initiative, an Asean-wide QR framework is now being developed, promising to make paying abroad as easy as paying at home.
Beyond bilateral linkages, the region is exploring multilateral solutions such as Project Nexus, which aims to connect multiple FPS through a single hub. If successful, Nexus could become the “internet of payments” for the region, simplifying and accelerating retail payments across jurisdictions.
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Meanwhile, local currency settlement (LCS) arrangements are gaining traction. The yen–rupiah settlement framework launched by Japan and Indonesia in 2020 promotes the use of local currencies in intra-regional trade. LCS transactions within Asean have more than doubled in just five years, from about 7% to over 15% of intra-regional settlements.
And on the technology frontier, central banks are piloting central bank digital currencies (CBDCs). Projects such as the Bank for International Settlement’s Project Agora and Rialto as well as the Hong Kong Monetary Authority-led mBridge are testing real-time settlement functions for cross-border trade. Together, these initiatives show that Asean+3 is not just keeping pace with global innovation — it is shaping it.
Stablecoins: promise and peril
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Alongside these official efforts, the private sector is rapidly advancing its own alternative: stablecoins — digital tokens pegged to another asset or currency — most often the US dollar. Their market cap is estimated at around US$300 billion ($391 billion), accounting for over 8% of total global cryptocurrency market cap.
In Asean, stablecoins are already popular for remittances, particularly in the Philippines and Vietnam, and for small-business cross-border trade. They offer speed, low cost, and accessibility — attributes that appeal to users frustrated by legacy banking systems.
Yet their risks are just as significant. Anonymous peer-to-peer transfers undermine anti-money laundering efforts. In some economies, stablecoins are being used to circumvent capital controls, potentially weakening monetary policy effectiveness and capital flow management. If dollar-backed stablecoins were to gain widespread use, the region could face a new form of “digital dollarisation”, eroding monetary sovereignty.
Jurisdictions elsewhere are moving fast. The EU’s Markets in Crypto-Assets (MiCA) regulation imposes strict licensing and reserve requirements on issuers. Japan restricts stablecoin issuance to banks and trust companies. The US passed the GENIUS Act this July and is debating federal rules. In the Asean+3 region, where regulatory frameworks vary widely, existing gaps must be closed through coordination and harmonisation.
A balanced policy compass
The rise of alternatives such as stablecoins will contribute to a more fragmented cross-border payment system. The real challenge lies in resilience: building a cross-border payment ecosystem that is diverse, interoperable, and robust against shocks.
Five policy priorities emerge:
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- Ensure interoperability. Develop common standards linking FPS, CBDCs, and private-sector solutions.
- Strengthen regulatory cooperation. Coordinate on anti-money laundering, capital flow oversight, and stablecoin supervision.
- Promote local currency use. Expand LCS frameworks to reduce foreign exchange mismatch risks in trade and investment.
- Deepen public–private collaboration. Integrate digital wallets and other private-sector payment innovations into the regional architecture set up by public institutions.
- Enhance resilience. Build redundant channels to protect against cyberattacks and geopolitical disruptions.
Evolving ecosystems, not fixed blueprints
The future of cross-border payments in Asean+3 will not be defined by replacing one dominant system with another. It is about cultivating a more diverse and interoperable financial environment, where multiple channels and instruments coexist and complement one another.
International financial systems are not designed or dictated by any single actor; they are living, evolving ecosystems shaped by the interplay of governments, central banks, private firms, and consumers. For Asean+3, the challenge is to guide this evolution thoughtfully — in ways that enhance resilience, preserve monetary sovereignty, and promote inclusive growth.
As the region’s trusted policy advisor, AMRO will continue working with its members to support this transformation — helping to ensure that the emerging payment landscape reflects both the diversity and the dynamism of Asean+3.
Yasuto Watanabe is director/CEO, Asean+3 Macroeconomic Research Office (AMRO)
