ASEAN+3 Financial Stability Report 2025

Global financial markets face heightened volatility from US policy uncertainty, fiscal sustainability concerns over major economies and geopolitical tensions. These developments pose direct challenges to ASEAN+3 economies, which are deeply integrated with the global financial environment, testing the region’s resilience. Beyond immediate challenges, rapid digitalization of financial services could also introduce new vulnerabilities.

This year’s report features three chapters: Chapter 1 reviews recent market developments and external uncertainties; Chapter 2 examines spillovers from global monetary policy shocks and ASEAN+3 policy responses; and Chapter 3 explores the financial stability implications of the digital transformation in the banking sector.

Chapter 1: Market Conjunctural: Stay on Guard Against External Uncertainties

Spillovers from US policy uncertainty—particularly over trade measures—have unsettled markets, while fiscal policy concerns that emerged in the US have quickly spread, heightening market sensitivity to fiscal risks. Geopolitical tensions continue to cloud the outlook and could induce further market volatility.

A notable shift has been the weakening of the US dollar’s safe-haven role, which could reduce the region’s reliance on US dollar funding but also fragment global financial markets, add complexity to asset pricing, and complicate liquidity management.

Domestically, although property market conditions have stabilized somewhat, vulnerabilities persist and require close monitoring. Policymakers must stay on guard against these external uncertainties while bolstering buffers to guard against global volatility.

Chapter 2: Global Monetary Policy Shocks: Spillovers and ASEAN+3 Policy Responses

The sharp monetary tightening by major central banks in 2022–2023 raised fears of financial stress in ASEAN+3, recalling past externally driven shocks. Rising interest rates and a stronger dollar during the period posed significant challenges.

Yet, the region avoided major disruptions, supported by well-calibrated policy mixes and stronger fundamentals. Stronger banking systems, ample foreign reserves, and available policy space have provided important safeguards, highlighting ASEAN+3’s growing resilience and its ability to draw lessons from past episodes.

Looking ahead, pockets of vulnerability remain, particularly in economies with high external exposure and elevated corporate debt risks. Continued vigilance and reinforced policy frameworks are necessary to manage potential spillovers from future global monetary cycles.

Chapter 3: Banking Sector in the Digital Age: Balancing Innovation and Stability

The rapid digitalization of financial services offers opportunities for greater financial inclusion and efficiency but also introduces new vulnerabilities. This digital transformation may affect market structure and could change the nature and distribution of financial stability risks.

The chapter underscores the risks—ranging from operational challenges such as cybersecurity threats and service disruptions to systemic vulnerabilities stemming from the growing role of nonfinancial companies. Financial inclusion initiatives in some economies may also leave new players more exposed to credit and business risks.

A holistic approach to the regulatory framework will be important to safeguard overall financial stability. Policies must adapt to ensure that innovation is managed within a sound and prudent regulatory framework, balancing the pursuit of technological advancement with the imperative of stability.