The biggest FTA to drive financial innovation

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The implementation of the Comprehensive Regional Economic Partnership will strengthen financial ties among potential RCEP members and boost financial innovation, industry insiders said at a side session of the Fourth Hongqiao International Economic Forum on November 5. .

Chen Yulu, vice-governor of the People’s Bank of China, said via a video link that China will do more to open up its financial market further by advancing the negative list mechanism.

China’s financial openness is expected to be achieved to higher standards after RCEP comes into effect. Surveillance policies should be further optimized and more measures should be organized to provide a better environment for foreign companies to set up businesses in China, Chen said.

While financial openness is expected to be further advanced, Chinese regulators should improve their financial management and risk control capacities in order to make supervision more professional and efficient, he added.

The RCEP, signed by the 10 member countries of the Association of Southeast Asian Nations and five other countries in the Asia-Pacific region, including China, will enter into force on January 1, 2022. It is the largest free trade agreement in the world, covering one third of the world’s population and representing 30% of global GDP.

Benjamin E. Diokno, governor of the Philippine central bank Bangko Sentral ng Pilipinas, said financial ties between Asian economies have already been tightened in terms of support for the use of local currencies, digitization, connectivity payments, financial stability and free trade.

Chea Chanto, Governor of the National Bank of Cambodia, agreed that the benefits were already visible after submitting RCEP ratification. The renminbi and other local currencies of ASEAN economies have played an increasingly important role in terms of cross-border trade, investment, and other economic and financial activities.

Liu Jin, vice president and chairman of Bank of China, said RCEP will open up new opportunities for financial institutions by providing better market access. Trade barriers will be further removed and companies will be able to more easily invest abroad and optimize their global mapping. All of this will translate into more business opportunities for financial institutions.

Financial institutions should come up with more innovations such as providing solutions along the value chain for different industries. They should also provide more efficient cross-border settlement, financing and transfer services to meet the needs of cross-border e-commerce. The offshore renminbi market should be encouraged to reduce transfer losses so that companies can more easily operate in different markets, Liu said.

More industrial and supply chains will be deeply entrenched after RCEP takes effect, facilitating trade through the use of multilateral and bilateral currencies, said Peter Foo Moo Tan, President and CEO of United Overseas Bank (China) Ltd.

Shanghai, as a global financial center, is expected to attract more regional headquarters of multinational companies to regulate exchange rates, interest rates and other financial risks in the city, he said.


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