Opening Ceremony of Asian Financial Cooperation Association (AFCA)
Keynote Speech by Dr. Veerathai Santiprabhob, Governor of the Bank of Thailand
Beijing, July 24, 2017
Vice President Mr. Ma Kai, Vice Premier of China
Mr. Guo Shuqing, Chairman of the China Banking Regulatory Commission (CBRC)
Mr. Chen Yuan, Vice Chairman of the Chinese People's Political Consultative Conference
Mr. Jin Liqun, President of the Asian Infrastructure Investment Bank (AIIB)
Mr. Norman Chan, Chief Executive of the Hong Kong Monetary Authority (HKMA)
Mr. Tian Guoli, Chairman of AFCA
Excellencies,
Executives of financial institutions,
Ladies and Gentlemen.
A very good afternoon to you all,
Today's opening ceremony of
the Asian Financial Cooperation Association (AFCA)
is a very auspicious occasion, and I am honoured to be a part of this historical event. I would
like to congratulate the Chinese government for successfully establishing AFCA - a new
forum, which I am certain, will play a significant role in enhancing financial connectivity and
cooperation within Asia. I would therefore like to take this opportunity to share with you my
thoughts on how we can further enhance financial connectivity to ensure sustained shared
- stated in AFCA's
benefits as mission1.
Ladies and gentlemen,
People have long been connected by trade along the ancient Silk Road dating back
more than 2,000 years ago. Today in modern times, many trade and investment agreements
between China and other Asian countries have promoted close economic ties in the region.
Thanks to the Chinese leadership, the spirit of connectivity and cooperation is further
enhanced through the One Belt One Road initiative. The Asian Infrastructure Investment
Bank (AIIB) is an added funding impetus to ensure that there will be physical infrastructure
connectivity, laying the strong foundation for shared economic prosperity.
China's growing economic ties with Thailand and
ASEAN have become stronger in
many aspects. China has been the largest trading partner of Thailand since 2013. Thanks to
the China-ASEAN FTA, China has been ASEAN's largest trading partner since 20092, while
ASEAN has been the third-largest trading partner of China since 20113. China has been one
Thailand's
of top foreign investors for the past nine years4. And in terms of tourism, almost
nine million Chinese tourists visited Thailand last year, the highest number from any country
in the world. It is clear that trade and investment connectivity between China and ASEAN
have been well established and have great potential to expand much further.
However, financial connectivity in our region has yet to catch up with trade and
Costs of cross-border financial transactions remain high, and there
investment connectivity.
is limited usage of regional currencies for cross border transactions. There is also limited
presence and penetration of regional banks in each country. In this regard, I see many
opportunities for Asian banks to play increasing roles in connecting businesses within our
region.
Enhanced regional financial connectivity will not only support trade and
investment activities, but can also promote productivity, immunity, and financial
I therefore welcome and fully support AFCA in its endeavor to promote
inclusivity in Asia.
greater financial cooperation. This forum will help ensure that our region can reap the full
benefits of increased financial connectivity. Greater regional economic integration can then
reach its full potential and harness the dynamism of this region for sustained shared benefits.
Currently, the Bank of Thailand has placed much emphasis on strengthening financial
connectivity within the region, particularly with ASEAN-5 and our neighbouring CLMV.
Let me highlight our two projects that have strong potential to connect people and
businesses in the region more efficiently by providing better access, wider choices, and lower
costs of financial services.

First, ASEAN central banks are working towards achieving the goals of the
ASEAN Banking Integration Framework. For example, the opening of Qualified
ASEAN Banks or QABs would establish important cross-border banking
networks, which will help increase efficiency of financial services across the
region. At present, the Bank of Thailand is in the process of negotiating QAB
agreements with the authorities of Malaysia, Myanmar, Indonesia, and the
Philippines.

The second initiative is the promotion of regional currency usage for trade
settlement and direct investment in our region. As we all know, regional
volatility of advanced countries' currencies
currencies tend to move together and
will continue to be high. The Bank of Thailand and the PBOC have been
promoting the use of Thai Baht and Renminbi for bilateral trade settlement
between Thailand and China. We have a THB/CNY bilateral swap agreement in
place since 2011 with a Chinese bank serving as the Clearing Bank for Renminbi
in Thailand since 2015. Additionally, the Bank of Thailand has worked with
several central banks in the region to relax relevant foreign exchange regulations
with a view to promoting the use of regional currency. Our local currency
framework with Malaysia became operational in 2016. Discussions with
Cambodia, Laos, and Indonesia are underway.
Thus far, ASEAN countries have undertaken a number of initiatives to upgrade our
financial infrastructure, but most of these initiatives are aimed for domestic usage. Much
work remains to enhance closer financial connectivity at the regional level.
Allow me to propose three key areas to strengthen our regional financial
connectivity. The intended outcomes of these initiatives are to raise productivity, build
immunity, and increase financial inclusivity for sustained benefits.
First, we need to embrace innovative financial technology to raise productivity.
The rapid pace of technological innovations has changed how we trade and how financial
transactions are conducted.
Alipay and WeChat Pay have demonstrated the power of modern payment
In Vietnam, consumers use OnePay to make financial transactions. Wing
services in China.
in Cambodia, BCEL in Laos and Wave Money in Myanmar provide instant payments and
money transfers through mobile phones to those without bank accounts. Last but not least,
Thailand's PromptPay provides consumers with one of the most efficient fund transfer
services in the region, using mobile phone or citizen ID numbers as a proxy for bank account
numbers.
also set up a "regulatory sandbox"
The Bank of Thailand framework to support
This framework allows innovators to test their
development of financial innovations.
products, and regulators to develop necessary regulatory requirements before innovative
products are launched to the public.
Nevertheless, embracing financial technology at the domestic level is not enough.
We need to create linkages among domestic payment platforms and innovative financial
Thailand has been active in
products to facilitate cross-border financial activities.
enhancing inter-platform linkages. On a bilateral level, Thai banks and FinTech firms are
developing cross-currency remittance services based on blockchain technology. At the
regional level, Thailand's national interbank payment system has recently been selected to be
the hub of the Asian Payment Network (APN).
Ladies and gentlemen,
As we all know, FinTech comes with new risks. Cyber threats, in recent years, have
increased dramatically in frequency, sophistication and impacts. This leads to my second
area of cooperation. AFCA members may wish to cooperate to build immunity to lessen
Among others, AFCA could serve as a forum to ensure
the impact of unwarranted risks.
that cooperation on cyber security is brought to fruition. Regulators also need to strengthen
their cooperation to minimize possible cross-border spillover risks. On this note, I am glad to
report that tomorrow CBRC and the Bank of Thailand will enter into a MoU on Banking
Supervision.
The
third area of cooperation is to enhance financial inclusivity in our region.
The financial sector must be aware of its social responsibility and take active roles in
promoting financial access and inclusive growth. People at large need to have access to basic
financial products at minimal prices, together with adequate financial literacy and financial
planning skills.
In summary, financial connectivity can be and needs to be enhanced in Asia.
AFCA, with its diverse membership, is in a unique position to deepen financial cooperation
and promote connectivity among its members. AFCA can play significant roles to strengthen
the Asian financial sector and Asian economies by improving productivity, building stronger
immunity, and promoting more financial inclusivity.
In closing, I would like to congratulate once again the Chinese leadership, CBRC, and
AFCA. I wish AFCA very fruitful years ahead.
Thank you.