The result of which was the remarkable speed of adoption of QR code for payment; in less than one year since its launch, QR code payment is accepted by over 2 million merchants all over Thailand. More importantly, financial institutions within the region have already taken advantage of the interoperability of the QR code by applying the common standard in their applications for cross-border transactions with their partners. We are certain there will be many similar partnerships in the future. Second, we must establish basic and open digital financial infrastructure so that further innovation can emerge to serve a wider range of consumers. Open infrastructure enables service providers to build value-added services on top at low cost. For instance, e-payment services were created based on our PromptPay infrastructure, such as bill payment and request-to-pay features. These, in turn, have helped facilitate e-payments for merchants and consumers and improved the overall e-commerce business landscape. Even charitable organizations are able to take advantage of the open-platform with e-donation. Meanwhile, the adoption of electronic payment through a common infrastructure can further create the data essential for information-based lending or for banks to improve on their risk models. Third, we must facilitate greater convergence of rules and regulations within our region to make sure that existing regulations do not impede advancement of financial connectivity. Efforts are being made in this area. ASEAN central banks are working on initiatives under the ASEAN Banking Integration Framework to make banking regulations more cohesive, aiming at achieving greater consistency with international best practice.

The dilemma is solved, at the domestic level, by the provision of eligible collateral. This may prove very uneasy for international liquidity: transferring ownership of substantial amounts of sovereign assets between countries or to international institutions would meet with huge legal and political difficulties. This is the rationale for conditionality. But, of course, conditionality creates an uncertainty which is incompatible with the purpose of instant supply of liquidity. A conditional facility will never be a perfect substitute for reserves. Many countries fully eligible to the Flexible Credit Line (FCL) have used foreign swaps instead. Anecdotal evidence suggests that swaps are often perceived as carrying less of a stigma effect. One way to deal with moral hazard would be to distinguish explicitly between two different risks facing each country: on the one hand idiosyncratic risk, created by national policies and country specific shocks; on the other hand, “systemic” risk stemming from aggregate liquidity shocks occurring on a broader – global or regional – scale. At the moment, foreign exchange reserves are meant to cover both risks. Since systemic risk is not related to a country size or GDP level there is potentially no limit to the demand for self insurance. A the same time, if systemic risk is defined in such a way that it is truly independent from individual countries behaviour or policies, protection through a multilateral mechanisms would not create any moral hazard problem.