banks ’ commercial interests. abif will complement the broader economic integration of asean. • as asean economies develop further, their corporates will expand their operations into the region. • the banks who have been servicing these corporates in their home markets are well placed to follow their customers and support them as they regionalise. bis central bankers ’ speeches • abif will provide them an enhanced vehicle to do so. more importantly, abif will be a vehicle to help grow a group of strong pan - asean regional banks with the scale and the capability to compete alongside the global banks. as asean becomes an economic powerhouse, so must our asean banks. looking ahead, a key priority for banking integration will be to help banking groups with operations in several asean countries to share and transmit information across borders. • for banks with pan - asean operations, the segregation of data and systems in multiple countries due to data on - shoring requirements may hinder effective group risk management and raise data security concerns. • we should harness technology to support the pooling of data in regional and global data centres. • data aggregation will help enhance consolidated risk management and ensure better protection of customer data. insurance integration in insurance, asean member states have agreed on an asean insurance integration framework. • asean members have agreed in - principle to liberalise the cross - border supply of marine, aviation and goods in international transit ( mat ) insurance in the seventh package of financial sector commitments of the afas. • when this agreement is signed and ratified in 2016, insurance companies will be able to offer mat insurance across asean ’ s borders. • this move will help to lower the cost of insuring cross - border business risks and help to spur intra - asean trade. the next key steps will be to liberalise the catastrophe insurance and reinsurance markets. • asean ’ s insurance penetration rate is barely half the global average, even as the incidence and severity of natural catastrophes in asean continue to increase. • this large and widening gap in insurance coverage leaves asean countries vulnerable to economic loss and production disruptions from natural catastrophes. • as risk exposures grow in scale, size and complexity, they will exceed the capacity of individual states to underwrite the risks confronting their communities and economies. liberalising asean ’ s insurance markets will reduce the cost of insurance protection to governments, to businesses as well as to consumers. • the insurance business is premised on the law of large numbers and risk pooling – the wider the distribution of risks, the more cost

integration is a win - win proposition. by exploiting economies of scale and strategic complementarities, every country in asean stands to gain. economic and financial integration in asean owes at least as much, if not more, to the natural functioning of market forces as it does to official initiatives like free trade agreements. integration in asean, more so than it has been in the european context, is a bottom - up, organic process driven by : • trade and investment flows arising from the production networks of global mncs spanning the asean region ; and • cross - border capital flows arising from the operations of global and regional banks. bis central bankers ’ speeches the success of asean financial integration therefore requires active industry collaboration and participation. the industry has an important role to play in working with regulators and governments to identify and clear roadblocks to growing their business across borders. the asean bankers association, representing the banking associations across all asean members, is well placed to play this role. • coming from the industry, you know what makes commercial sense, where the specific obstacles are, and you know how to persuade your governments and regulators to press on with economic and financial integration. • i wish you fruitful discussions and look forward to your ideas. thank you. bis central bankers ’ speeches