The elusive Digital ASEAN: Why a unified CBDC remains a distant ideal (Part 4 of 4)

This article is the third part of a four-piece series. Here, you can find Part 2 and Part 3

An ASEAN CBDC: A powerful intra-trade multiplier in a multipolar world

Regional economic blocs like ASEAN are essential in a world that is becoming more and more multipolar due to geopolitical changes, trade disputes, and supply chain reshoring. An interoperable ASEAN CBDC framework — whether it be a wholesale platform or a network of national CBDCs — is not only efficient in this dynamic environment, but also strategically resilient and an intra-trade multiplier, enabling ASEAN to fortify its domestic economic ties and increase its influence internationally.

1. Boosting intra-ASEAN trade:

• The current reality: Despite its importance, intra-ASEAN trade has traditionally lagged behind extra-ASEAN trade. According to ASEANstats (May 2024), intra-ASEAN trade made up about 22% of all ASEAN trade in 2023. 2021 and 2022 witnessed a post-pandemic spike, but 2023 saw a fall. One of the biggest obstacles is the expense and difficulty of cross-border payments.

• The CBDC impact: The time and expense involved in intraregional payments would be significantly decreased by an interoperable ASEAN CBDC. Imagine a system that would allow a Vietnamese supplier to pay an Indonesian textile company for raw materials instantaneously, and vice versa, without having to deal with numerous correspondent banks or pay expensive foreign exchange fees. This low-cost, real-time payment system would make it easier for companies, particularly SMEs, to participate in regional trade. By encouraging businesses to source and sell more within ASEAN, it would awaken latent economic potential and raise the total amount and value of intra-bloc trade. The region's economy, employment, and supply chain diversity are all directly fuelled by this increased trade.

• Enhanced supply chain resilience: Developing more robust regional supply chains would be made easier by an ASEAN CBDC in a multipolar world where global supply chains are increasingly disrupted. Companies may swiftly and effectively pay for parts or completed goods that are supplied within ASEAN, minimising reliance on outside funding sources that could be impacted by sanctions or geopolitical pressures.

2. Bolstering regional financial stability:

• An ASEAN CBDC framework improves the financial autonomy of the area by providing direct, real-time settlement in local currencies and lowering dependency on external correspondent banking networks. This acts as a buffer against outside shocks by reducing vulnerability to the volatility of the main international reserve currencies and financial institutions. Increased regional financial self-reliance is essential for stability in a multipolar world where financial leverage can be utilised as a geopolitical tool.

3. A counterbalance to external pressures:

• ASEAN is at a turning point in a time of increased competition between the United States and China. ASEAN is moving towards "strategic multi-alignment" — forming several alliances to optimise economic and geopolitical clout — as the World Economic Forum noted in July 2025. ASEAN's potential to function as a stabilising force and its collective bargaining power are enhanced by a strong, effective, and integrated digital payment system. Instead of being compelled to align because of financial dependence, it enables ASEAN to manage international issues from a position of increased domestic power.

The likely timeline: A gradual evolution

It is quite unlikely that a unified ASEAN CBDC will be launched with a "big bang" due to the operational difficulties and the delicate nature of sovereignty. The most plausible timeframe, on the other hand, suggests a slow, incremental evolution:

• 2025-2027: Deepening interoperability of National Fast Payment Systems: With RPC, this phase is already well under way. We anticipate more extensive bilateral QR payment connections throughout ASEAN by the end of 2025 (Xinhua, June 2025). This will keep growing and provide almost instantaneous cross-border payments to retail consumers.

• 2026-2029: National CBDC pilot expansions and wholesale interoperability: Learning from early adopters like Cambodia's Bakong, more ASEAN central banks are probably going to transition from research to national retail CBDC experiments. At the same time, wholesale multi-CBDC projects (such as mBridge) will develop, demonstrating the technological feasibility of cross-border direct interbank settlement. More central banks will participate in these wholesale programs.

• 2030-2035: Seamless cross-border interoperability of National CBDCs (Wholesale and Targeted Retail): This is the point at which the idea of a "ASEAN CBDC" — not a single currency, but a highly interconnected network — begins to take shape. For cross-border payments between banks and big corporations, wholesale CBDCs will probably be used extensively. National CBDCs may be added to the current RPC system as an underlying settlement layer for retail, providing even more efficiency and possibly new programmable features for particular use cases (such as aid or remittances).

• Beyond 2035: Deeper integration and potential for hybrid models: Discussions may shift to more ambitious, possibly partially harmonised, digital currency models, depending on the outcomes of previous stages and changing geopolitical conditions. However, the possibility of a really Euro-like shared digital currency is still quite distant and contentious.

Why it is critical: Securing ASEAN's digital future

The creation of an ASEAN CBDC ecosystem is essential to ASEAN's strategic stance in the twenty-first century and goes beyond simple technological advancement:

1. Preventing digital dollarization (or Digital Yuanization): ASEAN faces the danger of its developing digital economy becoming unduly dependent on foreign-issued digital currencies or stablecoins (such as the Digital Yuan or stablecoins backed by the dollar) if it does not have a strong, effective, and sovereign digital payment option. This might weaken national monetary sovereignty and make local economies more vulnerable to foreign monetary policy decisions. In order to maintain the digital economy's strong foundation in national currencies, an ASEAN CBDC is helpful.

2. Maintaining relevance in global finance: Countries and blocs who do not adjust run the risk of being left behind as the global financial landscape becomes more digitalised. ASEAN exhibits its dedication to innovation and keeps its position as a major force in international finance by aggressively investigating and putting CBDC solutions into practice.

3. Harnessing the digital dividend: By 2030, Southeast Asia's digital economy is expected to grow to a value of $1 trillion USD (World Economic Forum, July 2025). To properly realise this enormous economic opportunity and fairly distribute its advantages among member states, an effective, safe, and inclusive digital payment infrastructure supported by CBDCs is necessary.

Singapore's pivotal role: A bridge and an anchor

Singapore is in a unique position to play a key role in the establishment of an ASEAN CBDC ecosystem because of its standing as a global financial hub, robust and stable regional economy, and aggressive regulatory approach:

1. Technical leadership and innovation hub: With Project Ubin, which investigates DLT for interbank payments, as well as its involvement in the BIS Project Dunbar, a multi-CBDC platform trial with Australia, South Africa, and Malaysia, and Project mBridge, the Monetary Authority of Singapore (MAS) has been at the forefront of wholesale CBDC research and development. The technological intricacies of cross-border CBDC interoperability have been better understood because to these projects. Singapore's extensive knowledge of DLT and financial technology can act as the technological foundation for ASEAN-wide solutions. According to an Oliver Wyman study, "From Singapore's Project Ubin, it was clear that a common platform for multi-digital currency settlement is inherently more efficient than connecting multiple digital currency platforms."

2. Regulatory sandbox and thought leadership: While apprehensive about a retail SGD CBDC for domestic usage given the effectiveness of current payment systems, MAS's reasonable and practical approach to CBDCs highlights the necessity of getting ready for a future in which foreign digital currencies may become more common. Other ASEAN countries can learn a lot from Singapore's experience creating strong regulatory frameworks for fintech and digital assets. Singapore can promote predictability and confidence by spearheading the required regulatory harmonisation initiatives across ASEAN.

3. Trusted neutral convenor: Central bankers, legislators, and members of the corporate sector from all around ASEAN (and beyond) may come together in Singapore to talk, work together, and reach an agreement on complicated digital currency issues because of its standing as a neutral and reliable financial hub. Its ability to promote communication and useful cooperation is crucial for handling delicate sovereignty issues.

4. Financial depth and connectivity: Any interoperable ASEAN CBDC system can benefit greatly from Singapore's substantial financial markets and wide-ranging global connectivity. Its financial institutions offer crucial support for a new digital payment paradigm by managing foreign exchange risks and facilitating cross-border transactions thanks to their networks and experience. Singapore's financial services sector is still expanding well, with FX average daily traded volumes topping S$1.5 trillion in 2024 (MAS, July 2025), while the country's GDP growth has held up better than anticipated in H1 2025 (MAS, July 2025). The stability required to support regional efforts is provided by this solid financial and economic base.

To sum up, an ASEAN CBDC — which is a network of national digital currencies and wholesale platforms — is a strategic necessity in a world that is becoming more and more multipolar, not just a technological development. It is essential for promoting financial stability, increasing intraregional commerce, and enabling all member states to fully utilise the enormous potential of the digital economy. With its strong regulatory framework, leadership in financial innovation, and function as a reliable regional facilitator, Singapore is in a unique position to steer ASEAN towards this digitally linked future and transform the ideal into a workable reality.

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