This analytical note explores the financial stability implications of green bonds issuance in the ASEAN+3 region, highlighting its role in fostering a sustainable economy while addressing potential risks. The rapid growth of green finance in the region is expected to continue, driven by initiatives such as green bonds and sustainable lending. However, challenges such as greenwashing and stranded assets could pose risks to financial stability. Our analysis reveals that green bonds offer a price premium of 15 basis points, reducing borrowing costs and easing repayment risks, thereby supporting financial stability. However, firms in the region do not always reduce their total carbon emissions after the issuance of green bonds, raising concerns about greenwashing and its potential to undermine investor confidence and asset values. These findings highlight the importance of implementing robust green taxonomies, regulatory oversight, and green central banking to mitigate these risks. By addressing these challenges, green bonds can help achieve climate goals while safeguarding financial resilience in the region.