Eddie Yue0:00
Good morning, friends and colleagues, ladies and gentlemen. First of all, welcome to the fourth AMRO Forum. This is the first time that Hong Kong is hosting the forum. So a very special warm welcome to all of you who are here in Hong Kong in person and also to those attending virtually around the globe. The theme of this year's forum is 'From Fragmentation to Resilience,' and it speaks directly to the defining challenges of our time, including rising geo-economic fragmentation, disruptive supply chains, and emerging financial vulnerabilities. But even as the external environment becomes more challenging, ASEAN+3 members have demonstrated a remarkable capacity to withstand the shocks. Our region's economic growth has remained resilient despite the tariff shocks. Our financial markets have remained stable during recent episodes of global volatility, and our currencies have been stable for most of the time.
This is a testament to the progress we have made over the last few decades, including enhanced economic fundamentals, deeper local currency debt markets, and sound macro-financial policies. Importantly, progress in domestic reform and policy development is complemented by achievements in regional collaboration and integration. For example, the effort to develop local currency debt markets is supported by coordinated efforts such as the ABMI and the EMEAP Asian Bond Fund Initiative. The vast majority of bonds issued in the region are now denominated in local currencies, making us much less vulnerable to external spillovers. More generally, according to the BIS, EM Asia is more integrated than any other emerging market region, which will act as a buffer against global fragmentation.
But we cannot be complacent. While tariff-related uncertainties have stabilized somewhat, the broader risks from the real economy and financial markets persist. The region also faces structural changes like population aging, digitalization, and the rise of AI, which present both opportunities and challenges. To handle these challenges, domestic policies and reforms are of course important. But deepening regional cooperation will also play a key role. In my view, they include at least three areas. The first area is to deepen regional economic integration. A low-hanging fruit is trade digitalization, which can significantly streamline and make the trade process much more efficient, and that will empower SMEs to participate more fully in regional value chains. In Hong Kong, we have launched a number of initiatives to make trade finance more efficient and accessible, including improving digital trade finance through the use of cargo data under a project called Project Cargo X, and also leveraging innovative technology to tokenize trade documents under Project Ensemble. Benefits from these initiatives can grow exponentially when more jurisdictions come on board. We hope that jurisdictions here today will be able to join hands and work on these initiatives together.
The second area is to expand the use of local currencies. While progress has been made, local currencies still play a relatively small role in the region's cross-border transactions and external financing. The bulk of our trade invoicing is still not denominated in foreign currencies. We need to continue to enhance regional payment integration and local currency settlement to boost cross-border efficiency and strengthen economic resilience. This requires continued investment in deepening local capital markets, developing hedging instruments, and ensuring financial infrastructure is interoperable across borders. At the ASEAN level, we have already connected our faster payment system with our counterparts in Thailand and the Chinese mainland in recent years. We have also developed a cross-border wholesale CBDC platform jointly with other central banks. Again, these are initiatives we hope to take forward with our ASEAN+3 colleagues.
The third area is to strengthen our regional financial safety net. The Chiang Mai Initiative is a cornerstone of regional liquidity backstop. Ongoing efforts to further strengthen and broaden the CMIM will further complement the safety net and enhance the mechanism's readiness and financial credibility to respond very quickly when potential liquidity pressures arise in the region. In all these endeavors, both AMRO and the BIS Asian Office play indispensable roles. AMRO's timely and high-quality macroeconomic surveillance enhances policy coordination among ASEAN+3 members and prepares for external shocks. The BIS Asian Office serves as a regional hub that facilitates dialogue and cooperation among central banks in the region. The HKMA remains committed to strengthening our collaboration with both to advance regional financial integration and resilience. Today's forum is a good example of that collaboration. I am confident that the discussions today on macroeconomic risks, on the shifting global financial landscape, and on the opportunities for cooperation will generate valuable insights that will guide our collective actions in the region. I wish you all a very productive and enjoyable forum today. Thank you very much.
