Are Asia's finance system meeting global standards?
MANILA, Philippines (UPDATE) - Financial institutions in Asia are making progress in developing reforms towards meeting global standards, officials of the Financial Stability Board (FSB) Regional Consultative Group (RCG) for Asia said.
The FSB was formed to develop and implement regulations and policies for financial authorities at the international level.
The FSB's consultative group for Asia, composed of non-FSB members, is co-chaired by Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco and Vice Commissioner for International Affairs at the Financial Services Agency of Japan Masamichi Kono.
"I think we are moving towards compliance with the different reforms. The progress may not be the same with the different jurisdictions but definitely there is forward movement to this regard," Tetangco told reporters in a briefing after the sixth meeting of the RCG Asia in Cebu.
In its meeting, the RCG discussed several concerns in implementing reforms, including cross-border issues arising from OTC derivatives reforms.
"We need to find a way to be able to meet the requirements under these global standards," Tetangco said.
"It would be useful for countries to have a roadmap to prioritize reforms in as far as their jurisdictions are concerned," he added.
According to Kono, the Asian region is now in a good position to be a leader in the global financial community, following lessons learned from the 1997 financial crisis.
"This time around, we really have the opportunity and the capacity to lead some of the global discussions," he said.
"I think we will be leading the growth process at a global level," he added.
The sixth meeting of RCG Asia, hosted by BSP, also discussed financial market infrastructure reforms, including those relating to payment systems, central counterparties and trade repositories.
FSB's Jason George also believes that lessons from the financial crisis in the late 90s strengthened Asia's financial systems.
"In many ways, Asia learned a few lessons in the 1997 financial crisis and largely those lessons contributed to the strength of the financial systems in Asia in the recent global financial crisis," he said.
George noted that while many of Asia's financial systems are meeting minimum requirements in global reforms, more work needs to be done.
"In some of the reforms that have come out from the FSB, and from other global centers, you see that many Asian financial systems already meet some of the minimum requirements. On the other hand, there are certain areas of the reforms that pose challenges for Asia, and in other regions as well," he said.
The new international standards, which are still being developed, aims to strengthen the essential infrastructure supporting global financial markets.
George recognizes that these reforms cannot be implemented overnight and is a process that will take time.
The RCG in Asia is also looking at ways to mitigate the effects of natural disasters on the financial sector, using as case studies the 2011 earthquake in Japan and 2013's typhoon "Yolanda" in the Philippines.
"Preparation and the use of new technologies such as mobile payments and cloud computing helps...There were also discussions on difficult decisions such as should financial authorities reopen the market immediately after natural disasters," said Kono.
Tetangco, meanwhile, said emerging markets are monitoring the effects of the continued tapering of the US Federal Reserve bond buying program, noting that impact has not been negative so far.
"The markets have not violently responded to this," Tetangco said.
"There is more information but at the same time we don't have complete information so we need to be cautious," he added.
Including the consultative groups in Asia, Europe and other regions, the FSB covers about 90 jurisdictions worldwide.
RCGs meet at least once a year. The previous RCG Asia meeting was held in Japan.