This article was first published in The Business Times on May 4, 2026.

The next phase of integration will matter most

Cross-border payments have become more convenient across ASEAN+3 bloc, which comprises the 11 members of ASEAN as well as China, Japan and Korea.

Tourists in the region increasingly do not carry cash and there is no need for them to change currency ahead of travel. A mobile phone and a banking app are usually sufficient.

Like a Singaporean enjoying Songkran in Thailand, a Malaysian shopping in Hong Kong, China or an Indonesian traveling through Japan, tourists can now make payments quickly and seamlessly.

This reflects real progress. Over the past decade, ASEAN+3 economies have made significant strides in linking retail payment systems across borders.

Why payment connectivity matters

Cross-border digital payments are now firmly on the regional policy agenda, identified as a priority area for cooperation at the recent ASEAN+3 Finance Ministers’ and Central Bank Governors’ Meeting.

At a time of rising geopolitical fragmentation, payment systems risk becoming more segmented across jurisdictions and technologies. This strengthens the case for better cross-border payment connectivity in a region deeply reliant on trade and cross-border capital flows.

The objective is not to replace global integration, but to complement it. As intra-regional economic ties deepen, financial linkages must keep pace. Efficient and reliable payment systems are a foundation.

International progress – and its limits

Globally, cross-border payments can be slow, costly and opaque, especially for payments involving emerging markets and developing economies.

The G20 road map, launched in 2020, aims to improve speed, reduce cost, increase transparency and widen access by 2027. Progress has been made, but unevenly.

Wholesale payments have become faster, but remain below targets. Retail payments are still relatively expensive, although remittance costs have declined over time.

ASEAN+3: A leader in retail connectivity

Against this backdrop, ASEAN+3 stands out as a global leader in retail cross-border payments, having made extensive payment linkages.

QR-based payments and fast payment system linkages now enable near real-time, low-cost transactions in local currencies. These systems support tourism, small-value remittances and everyday cross-border transactions.

However, progress in wholesale cross-border payments has been more limited. It can take days for funds to be credited into the recipient’s account after its bank has received the funds from overseas.

Wholesale connectivity faces deeper structural and policy constraints, including differences in regulatory and compliance frameworks (such as capital flow management measures), technical disparities and shallow local currency foreign exchange markets.

This is where the next phase of integration will matter most. Strengthening wholesale connectivity will be critical to supporting trade, investment and deeper regional financial integration.

The next frontier: Tokenized payment instruments

New forms of digital money are emerging alongside existing payment linkages.

Tokenized payment solutions represent the next step. They enable 24/7 atomic settlement, programmability and potential offline use. These solutions include public forms – tokenized reserves and central bank digital currencies (CBDCs) – and private forms such as stablecoins and tokenized deposits.

Central banks are actively exploring tokenised reserves and CBDCs. Multilateral projects such as Project Agora, Project Dunbar, mBridge, and Project Ubin+ show the potential to reduce settlement times, lower risks and improve foreign exchange transactions – helping to advance wholesale cross-border connectivity.

However, most projects remain in the experimentation phase.

In parallel, stablecoins are moving closer to wider adoption. Greater regulatory clarity could support their integration into mainstream payment systems. The Guiding and Establishing National Innovation for US Stablecoins (Genius) Act and the European Union’s Markets in Crypto-Assets offer helpful structural guidance.

At the same time, stablecoins also pose policy concerns. There are important regulatory challenges because maintaining a fixed value – the “stable” in stablecoin – is a tall order.

Moreover, foreign currency-denominated stablecoins could contribute to currency substitution, weakened monetary policy transmission and facilitate circumvention of restrictions on cross-border capital flows.

In response, major jurisdictions in the region, including Hong Kong, China; Japan; Korea; and Singapore, together with international bodies and other jurisdictions across the world, are strengthening stablecoin regulatory frameworks while continuing to support innovation.

Three priorities stand out.

First, deepen retail connectivity. Expand access, raise transaction limits, and move toward more scalable, interoperable solutions, while exploring multilateral platforms such as Project Nexus.

Second, accelerate wholesale connectivity. Strengthen supporting infrastructures, including foreign exchange settlement and liquidity facilities, while improving regulatory efficiency and linking payment reforms with broader capital market development. Both bilateral and multilateral approaches, including tokenized platforms, should be explored.

Third, deepen regional coordination on digital assets, particularly stablecoins. This includes recognizing differences in regulatory frameworks, assessing macro-financial implications, and enhancing cross-border regulatory and supervisory cooperation.

Toward integration

ASEAN+3 has shown that more efficient cross-border payments are achievable.

The next phase is more complex. It will involve scaling retail successes, modernizing wholesale payments, and managing the risks and opportunities of emerging technologies. Interoperability across jurisdictions and payment systems will be critical.

Above all, these efforts will require stronger regional coordination and alignment with international standards – ensuring that payment systems support efficiency and integration, while safeguarding trust, resilience and policy autonomy.