Wang Jiaqiang, Shao Ke, and Ma Tianjiao also contributed to this article
Review and Outlook of the Asian Regulatory Policy from 2023 to Mid-2024
Since 2023, Asian economies have continued to strengthen regulatory measures, issuing numerous regulatory regulations to support the sound operation of financial institutions and the steady recovery of the real economy. Prudent regulation has been optimized and upgraded to maintain the stability of the financial system; industry regulation has been precise and effective, guiding the orderly development of banking, insurance and securities industries; regulation in emerging areas has been proactive, achieving a balanced approach between promoting innovation and preventing risks; regulation in financial technology has been open and inclusive, promoting financial innovation and efficient compliance.
I. Prudent regulation improved and upgraded
Since 2023, regulatory agencies in Asian economies have fully utilized macro-prudential management and micro-prudential supervision to promote the sound operation and healthy development of systemically important banks, continuously consolidate the stable foundation of financial system, and better support economic and financial development.
Asian economies accelerated the establishment of a sound macro-prudential policy framework, continuously enriching and improving policy tools, strengthening the regulation of systemically important financial institutions, promoting the implementation of Basel III, and preventing and resolving major financial risks. In September 2023, Chinese regulatory agencies identified 20 domestic systemically important banks, urging them to meet the requirements for additional capital and leverage ratio, and enhance their risk resistance and loss absorption capabilities; in October 2023, the Measures for the Assessment of Systemically Important Insurers was issued to establish a mechanism for assessing and identifying systemically important insurance companies. The Monetary Authority of Singapore released the latest framework for Domestic Systemically Important Insurersin September 2023 and identified four systemically important insurance companies for the first time, and carried out additional supervision on systemically important insurers.
Asian economies have been gradually implementing Basel III, strengthening capital requirements and comprehensive risk management for banks. In October 2023, the National Financial Regulatory Administration of China issued the Rules on Capital Management of Commercial Banks, optimizing the measurement method of risk-weighted assets and building a differentiated capital regulatory system, to comprehensively enhance the level of bank risk management and the effectiveness of serving the real economy. In October 2023, the Financial Services Agency of Japan revised the capital adequacy ratio requirements for Pillar 1 and Pillar 3 according to Basel III, further improving the bank capital quality of and risk control capabilities. South Korea began implementing the credit risk framework, credit valuation adjustment measures, and basic review of trading books under Basel III in January 2023. The Central Bank of Malaysia, representing the developing countries in Southeast Asia, revised the capital adequacy ratio framework in March 2023, to set standards and guidelines for financial institutions to calculate operational risk and central counterparty exposures according to Basel III; the capital adequacy ratio framework of Basel III was released in December 2023, specifying the specific quantitative methods for risk-weighted assets of credit risk, market risk, and operational risk, and strengthening bank capital regulation.
Asian economies have strengthened risk prevention and control in areas such as illegal fundraising and money laundering by financial institutions, enhancing internal controls and comprehensive risk management of financial institutions, and improving their financial regulatory capabilities and financial governance. The China Financial Stability Report (2022) released in May 2023 requires platforms that meet the specified conditions to establish a financial holding company in accordance with the law, and bring all institutions engaged in banking, securities, insurance and other financial activities within the group under the supervision of the financial holding company, to improve corporate governance, strengthen firewall construction, and conduct financial business in compliance with laws and regulations. Among Southeast Asian countries represented by Vietnam and Singapore, Vietnam officially implemented the new version of the Anti-Money Laundering Law in March 2023, establishing a strict and effective internal governance system, and strengthening the monitoring and review of fund flows and transactions; the Monetary Authority of Singapore released the Consultation Paper on the Notice Relating to FI-FI Information Sharing for AML/CFT in November 2023, launching a platform for sharing money laundering and terrorism financing information and cases to facilitate the sharing of customer information among financial institutions.
II. Quality and effectiveness of regulation and supervision enhanced
In 2023, Asian financial industry regulation emphasizes precision and effectiveness, guiding banking, insurance, and securities industry to properly address global banking liquidity risks, regulating business development on weak areas of the real economy, improving the capital market system, and providing regulatory safeguards for financial support of rapid economic development in the Asia-Pacific region.
First, Banking regulation guides the sound and steady development of the industry.
Support the development of the real economy. Asian economies leverage the function of optimizing resource allocation in the banking industry to guide capital flow to key sectors such as private small and micro enterprises, technological innovation industries, and rural revitalization. In June 2023, the Chinese regulatory authority issued guiding opinions on financial support for comprehensively promoting rural revitalization and accelerating the construction of an agricultural powerhouse, establishing and improving a multi-level, wide-coverage, and sustainable modern rural financial service system, to enhance financial service capabilities, and support the comprehensive promotion of rural revitalization and the accelerated construction of an agricultural powerhouse. The Financial Services Commission of South Korea issued the Notice of Regulatory Revisions in the Five Major Financial Sectors Encompassing Banks, Insurance Companies, Savings Banks, Specialized Credit Finance Business Companies and Mutual Finance Unions in February 2023, appropriately relaxing regulatory requirements for financial institutions, encouraging financial institutions to support the stable development of the housing market, and promoting the rapid recovery of real estate demand. Southeast Asian countries have boosted economic development through green finance and digital finance. Bank Indonesia announced the implementation of liquidity incentive policy in June 2023 to stimulate loan growth in the natural resources, tourism, green finance, and inclusive finance sectors. The Monetary Authority of Singapore and the National Bank of Cambodia signed a memorandum of understanding in July 2023 to cooperate on the Financial Transparency Corridor initiative, establishing supportive digital infrastructure, optimizing information exchange between Singapore and Cambodia’s financial institutions, and promoting trade and cross-border financial services between their small and medium-sized enterprises.
Standardize the development of banking business. Asian economies continue to strengthen regulatory trends in banking compliance, orderly promoting the transformation of banking business to enhance their core competitiveness. In January 2023, the former China Banking and Insurance Regulatory Commission issued the Measures for the Administration of Fixed Asset Loans (Draft for Comments), the Measures for the Administration of Working Capital Loans (Draft for Comments), the Measures for the Administration of Personal Loans (Draft for Comments), and the Regulations on Project Finance Business (Draft for Comments), which became the guiding documents for commercial bank loan business and played a regulatory role in standardizing bank loans. Southeast Asian countries attach importance to the compliant development of loan business. In June 2023, Vietnam issued detailed regulations on credit loans, lowering the loan threshold and strictly defining institutional responsibilities. The Bank of Thailand formulated the Draft Responsible Lending Notification in September 2023, stipulating that the debt repayment ability of low-income groups shall be taken into account in new loans to prevent excessive household debt, and to improve the loan quality of Thailand’s financial system. The Financial Services Authority of Indonesia issued the Commercial Bank Governance Rules in September 2023, optimizing the way banks conduct business, adjusting the bank governance system, and strengthening internal control compliance management and digital technology application. The development of financial technology has promoted the acceleration of digital transformation in banks, making online payments under strong regulation.
Strengthen consumer rights protection. The level of consumer rights protection is a key point of competition and a breakthrough for business growth in the banking industry. Regulatory agencies in Asian economies have continuously guided banks to fully fulfill their main responsibilities for consumer rights protection and comprehensively enhance their ability to protect consumer rights. In May 2023, the People’s Bank of China advocated the establishment and improvement of an internal platform for the protection of financial consumer rights and interests, regulating the collection and use of consumer financial information, the financial marketing and advertising practices, and the use of standardized contracts, in order to effectively protect the long-term and fundamental interests of financial consumers. The Central Bank of the Philippines issued the Rules of Procedure for the Consumer Assistance Mechanism (CAM), Mediation and Adjudication and the Financial Products and Services Consumer Protection Act in March 2023, to ensure the fairness, reasonableness, and transparency in market behavior and dispute resolution, and protect the rights and interests of financial consumers by establishing an online mediation platform and mediation time limits. The Central Bank of Sri Lanka issued the Financial Consumer Protection Regulations in August 2023, aiming to strengthen the mechanism for protecting financial consumers.
Second, the insurance industry regulation has become more professional.
Strengthen the regulation on insurance industry. Asian economies continue to strengthen the regulation of insurance institutions, crack down on irregular innovative businesses, enhance the supervision of fund utilization, and improve insurance coverage and inclusiveness. In January 2023, Vietnam’s newly revised Insurance Business Law came into effect, relaxing the approval procedures for new products, prohibiting credit institutions from forcing borrowers to buy insurance products and insurance companies from directly investing in real estate, and abolishing the upper limit on micro-insurance premiums. The new law further regulates the operation of the insurance industry and protects the legitimate rights and interests of insured persons. The Central Bank of Malaysia issued the Insurance Fund Management Policy in July 2023, which aims to enhance the management of insurance funds for licensed insurance companies, strengthen the unified and coordinated management of assets and liabilities, enforce strict regulations on policy information and claims records, and safeguard the interests of policyholders. The Insurance Regulatory and Development Authority of India released the IRDAI Guidelines 2023 in October 2023, aiming to establish insurance distribution channels specifically for women and rural areas, and enhance insurance inclusiveness and accessibility.
Strengthen insurance risk prevention. Asian financial regulatory agencies have paid high attention to the risk management capability of the insurance industry’s asset-liability, and strengthened the supervision of key fields such as insurance intermediaries and insurance channels. In September 2023, the National Financial Regulatory Administration of China issued the Notice on Optimizing the Solvency Supervision Standards for Insurance Companies, implementing differentiated capital regulation, optimizing capital measurement standards and risk factors, and strengthening the management of insurance companies’ solvency capacity; based on the Measures for the Administration of Insurance Sales Behavior, it also regulated the sales behavior of insurance, unified the regulatory requirements for insurance sales behavior, and protected the legitimate rights and interests of policyholders, insured persons, and beneficiaries. The Monetary Authority of Singapore strengthened the regulation of insurance companies’ asset and liability risk exposures in November 2023, stipulating the submission of report forms, glossaries, and submission schedules by insurance companies.
Third, the securities industry regulation has undergone refined reform.
Improve the construction of the capital market system. Asian economies have improved the regulatory system of the securities industry, enhanced the adaptability and inclusiveness of the capital market system, and improved the multi-level capital market system, to effectively promote the development of the real economy. In July 2023, the Ministry of Finance of China issued the Measures for the Administration of Registration, Custody and Settlement of Government Bonds, regulating the registration, custody and settlement of government bonds, protecting the legitimate rights and interests of investors, preventing risks in the government bond market, and promoting the efficient operation of the government bond market; in December 2023, the People’s Bank of China issued theMeasures for the Administration of Bond Valuation Business in the Inter-bank Bond Market, regulating the valuation of bonds in the inter-bank bond market, continuously improving the fairness of bond valuation products, enhancing valuation techniques and transparency, and encouraging diversified competition among valuation agencies. India has accelerated the construction of the securities market system, and in May 2023, it issued the Regulations on Capital Issuance and Disclosure in 2023, revising the requirements for underwriting, online access to materials, announcements of bonus share issuance, and non-material stock distribution; the Online Resolution of Disputes in the Indian Securities Market released in August 2023 has provided online dispute mediation and arbitration mechanisms for investors and listed companies. The Securities Commission Malaysia released the Guidelines on Technology Risk Management in August 2023, introducing a comprehensive regulatory framework for capital market technology risk management and defining the roles and responsibilities of boards of directors and senior management.
Promote high-level opening-up. Asian economies have steadily advanced the high-level opening-up of capital markets, enhancing the international competitiveness and comprehensive service capabilities of financial markets. In April 2023, the People’s Bank of China issued the Interim Measures for the Administration of Mutual Access Between the Chinese Mainland and Hong Kong region Interest Rate Swap Marketsof the People’s Republic of China, protecting the legitimate rights and interests of domestic and foreign investors and maintaining the order of the interest rate swap markets. The State Council of South Korea passed the Amendment to the Enforcement Decree of Capital Market Act in June 2023, allowing foreign investors to open accounts and engage in investment activities at securities companies using standardized corporate IDs or passport numbers without registration with the Financial Supervisory Service. The scope of post-trade reporting for over-the-counter transactions will be relaxed, the utilization rate of comprehensive accounts for global asset management companies will be increased, and the new act will be aligned with global standards, providing convenience and confidence for foreign investors to enter the Korean stock market. The Securities Commission Malaysia released the revised Equity Guidelines in December 2023, expediting the transfer application process and increasing the vibrancy of the capital market.
III. Predictive regulation of emerging financial services
In 2023, the growth of emerging economies in Asia is accelerating, and there is broad development space for inclusive finance, green finance, cross-border finance, and other emerging financial services. Financial regulatory institutions are keeping pace with policies, guiding the development of new financial norms, and further promoting economic development.
First, strengthen the regulation of inclusive finance. Inclusive finance has been regulated and guided to introduce differentiated financial services for vulnerable groups, agriculture, forestry, animal husbandry and fishery industries, and small and medium-sized enterprises, so as to enhance financial inclusion and equity. In September 2023, the Ministry of Finance of China issued the Measures for the Administration of Special Funds for the Development of Inclusive Finance, which regulates the allocation, use and management of special funds for inclusive finance development, gives full play to the guiding and leveraging role of fiscal funds, and enhances the effectiveness of fiscal support policies for inclusive finance development. With a large number of inclusive groups, Southeast Asian countries have increased support for vulnerable groups, micro and small enterprises, and agriculture, forestry, animal husbandry and fishery industries. In February 2023, the Central Bank of Malaysia issued the Exposure Draft on Fair Treatment of Vulnerable Consumers, aiming to encourage financial providers to respond to the financial needs of vulnerable groups. In June 2023, the Central Bank of the Philippines issued the revised Agriculture, Fisheries and Rural Development Financing Enhancement Act, which requires banks to allocate a certain amount of credit to provide funds for the agricultural and fisheries sectors in the Philippines. In July 2023, the State Bank of Vietnam introduced a number of policies to support small and medium-sized enterprises, accurately identify and comprehensively evaluate the difficulties faced by these enterprises, improve their ability to obtain loans, and set a cap on loan interest rates, to alleviate the difficulties of these enterprises.
Second, regulate green finance regulation. Asian economies have made efforts in supporting industrial low-carbon transformation, carbon trading systems, and the formulation of green finance standards, to promote sustainable economic development. In July 2023, Chinese regulatory agencies formulated the Measures for the Administration of Voluntary Greenhouse Gas Emission Reduction Trading (For Trial Implementation), optimizing the management methods for the registration of voluntary greenhouse gas emission reduction methodologies, projects, emission reductions, approval and verification institutions, and trading institutions, and clarifying the rights and responsibilities of various market participants; in August 2023, the Beijing Green Exchange issued a notice that the national voluntary greenhouse gas emission reduction trading system opened the account opening function. Market participants may submit application materials and trading account for registering account, ushering in an active period for China’s national carbon market. In February 2023, the Cabinet of Japan approved the Basic Policy for Realization of Green Transformation, which clearly stated the maximum utilization of renewable energy and nuclear energy, and the issuance of JPY 20 trillion in new government bonds over the next decade to support decarbonization investments by companies. The Abu Dhabi Global Market in the United Arab Emirates announced the implementation of a sustainable financial regulatory framework in August 2023, which introduces regulatory measures for disclosure requirements in environment, society and governance based on the rules on investment funds, portfolio management and bonds that are oriented towards sustainable development. The Securities and Exchange Board of India issued the Consultation Paper on ESG Disclosures, Ratings and Investing in February 2023, establishing a regulatory framework for ESG disclosure of listed companies, ESG investment of mutual funds, and ESG rating providers.
Third, improve cross-border financial regulation. Cross-border finance is crucial for efficient and secure opening-up, and related regulatory policies have focused on cross-border capital flows, facilitation of investment and financing, and innovation of product services. In 2023, Chinese regulatory agencies issued theNotice Regarding Further Supporting Foreign Trade Enterprises in Expanding the Cross-border Use of the Renminbi and Promoting Trade and Investment Facilitation, further facilitating the use of RMB in cross-border trade and investment, and better meeting the market needs of foreign trade enterprises in transaction settlement, investment and financing, risk management, etc.; the Opinions on Further Optimizing the Foreign Investment Environment and Increasing Efforts to Attract Foreign Investment, the Notice of Further Deepening Reform and Promoting Cross-border Trade and Investment Facilitation (2023), and the Notice of Expanding the Pilot Program of High-Level Opening-up of Cross-Border Trade and Investment were issued, exploring a convenient and secure management mechanism for data cross-border flows, continuously strengthening high-quality financial services, promoting facilitation of cross-border trade, investment and financing, and promoting high-quality development through high-level opening-up. The Monetary Authority of Singapore and the Reserve Bank of India (RBI) launched PayNow-UPI in February 2023, which connects Singapore’s cashless payment platform PayNow with India’s Unified Payments Interface (UPI), providing cheaper, faster, and secure cross-border retail payments and remittances for businesses and individuals. The Bank of Thailand and the Hong Kong Monetary Authority launched the PromptPay cross-border QR code payment connectivity in December 2023, providing convenient and secure cross-border retail payment services for visitors between the two regions.
IV. Open and inclusive regulation of financial technology
In 2023, Asian economies paid high attention to the development of financial technology, updated regulatory regulations to adapt to new forms of financial products and services in the digital age, continued the strict regulatory policy on encrypted assets, and gradually clarified the regulatory framework with a regulatory approach of dredging instead of blocking.
First, actively promote the research and development of legal digital currency. Asian economies have accelerated the development and test of central bank digital currencies, while developed countries have achieved breakthroughs in this field. In February 2023, the Bank of Japan began the third phase of testing for the digital yen, by integrating with external systems of commercial banks to verify the smoothness of digital yen deposits, withdrawals, and remittance transactions, laying the foundation for entering the pilot phase. In October 2023, the Bank of Korea announced that it would collaborate with the Bank for International Settlements (BIS) to test wholesale CBDC, with a focus on exploring the feasibility of establishing a currency system based on wholesale CBDC. In June 2023, the Monetary Authority of Singapore published a technical whitepaper on Purpose Bound Money (PBM), outlining the technical specifications of PBM throughout its issuance to redemption lifecycle, as well as protocols interfacing with digital currencies, which contribute to improving the settlement efficiency and user experience of digital currencies. In addition, the Hong Kong Monetary Authority has accelerated the exploration of central bank digital currency applications. In April 2023, it announced the launch of the second phase of the “e-HKD” pilot program and the Ensemble project, aiming to enhance its financial service capabilities and consolidate its position as an international financial center.
Second, actively promote the application of artificial intelligence in the financial field. The AI represented by ChatGPT has caused a wave in the financial sector, helping financial institutions to digitize and transform intelligently. In November 2023, the People’s Bank of China, in conjunction with the State Administration of Foreign Exchange, issued the Notice of Improving the Level of Digital Services of Banks in Handling Capital Account Business, aiming to promote the digitalization of capital project services nationwide and encourage banks to provide convenient and efficient online and remote services for institutions, individuals, and other entities in handling foreign exchange and cross-border RMB transactions. Japan and South Korea have strengthened innovation and regulation in the field of artificial intelligence. In May 2023, the Financial Services Commission of South Korea announced that it will take multiple measures to promote the application of AI in the financial sector, including establishing an AI database for the financial sector, improving the regulatory environment for financial data, and setting up an AI testing platform. Japan and the EU held a ministerial meeting on the digital field in Tokyo in July 2023, announcing that they would cooperate in the formulation of international rules for generative AI. In addition, the Central Bank of Indonesia released the Open Banking Operational Guidelines in March 2023 to promote data sharing between banks and third parties, build consumer-eccentric services and products, expand financial inclusiveness, and improve the efficiency and competitiveness of financial services.
Third, continue to be under high pressure for the regulation of cryptocurrencies and digital assets. Asian economies have adopted a cautious attitude and established a framework for managing cryptocurrency assets with an approach of dredging instead of blocking to regulate the development of the cryptocurrency industry. In July 2023, the Ministry of Finance of Japan announced the financial policy guidelines for the 2023 administrative year, proposing to promote digital development, strengthen regulation of digital currencies and crypto assets, and establish a registration and review system to support the issuance and circulation of stablecoins. In April 2023, the Bank of Korea stated in the 2022 Payment and Settlement Report that it would strengthen regulation of cryptocurrency assets, including regulating financial soundness, disclosure, risk management, and internal controls. The Monetary Authority of Singapore issued regulatory measures for digital payment token services in November 2023, specifying the minimum technical and network risk management requirements for digital payment token service providers to safeguard consumer rights and interests. Indonesia launched the cryptocurrency exchange and clearinghouse in July 2023, which is the only legal platform for trading digital assets in the country, aiming to strengthen regulation of the cryptocurrency market and protect investor rights.
Fourth, gradually introduce regulatory sandbox frameworks. In 2023, China’s financial technology “Regulatory Sandbox” continued to expand, with projects being updated in Hubei, Shandong, Fujian, Anhui, Jilin, and other regions, focusing on sectors such as agriculture and green finance, strengthening the leading, escorting, and incubating role in financial technology innovation, and providing strong support for the high-quality development of the real economy. The digital RMB sandbox trial approved by the Hong Kong, Monetary Authority in July 2023 has achieved phased results. The sandbox trial enabled free choice of digital RMB payment and local currency settlement in Chinese Mainland and Hong Kong, China, through the Faster Payment System of Hong Kong Monetary Authority and the digital RMB system of the Digital Currency Institute of the People’s Bank of China, providing a model for cross-border bilateral cooperation. Malaysia launched a consultation on revising the Financial Technology Regulatory Sandbox Framework in March 2023 to enhance regulatory adaptability and sandbox operational efficiency.
【This article is AFCA Working Paper No. 2025-10/201】
Expert Biography
Chen Weidong, Director Fellow of Asian Financial Cooperation Association Think Tankers Committee, General Manager of the Research Institute, Bank of China. Dr. Chen joined the Bank in 1999, and was closely involved in the IPO of Bank of China Hong Kong Limited and the restructuring and IPO of the Bank. From 2005 to 2011, Dr. Chen was the Deputy General Manager of the Strategic Development, Bank of China. From 2011 to 2014, he served as the Vice President of Bank of China Liaoning Branch. From 2014 to 2019, Dr. Chen served as the Executive Deputy Director and the Director of the Institute of International Finance, Bank of China. Dr. Chen is also the Secretary General of the China International Finance Society since February 2015, and the chief editor of the journals of Studies of International Finance and International Finance since July 2014.He graduated from the International Economy Department, Renmin University of China with a Ph.D. in economics in 1997.
Wang Jiaqiang, Shao Ke, and Ma Tianjiao also contributed to this article.
About AFTTC
No. 2025-01/192 Liu Xiaoshu, Review and Outlook of the Asian Currency Market from 2023 to Mid-2024
No. 2025-03/194 Feng Yuan, Review and Outlook of the Asian Bond Market from 2023 to Mid-2024
No. 2025-04/195 Chen Weidong, Review and Outlook of the Asian Banking Industry from 2023 to Mid-2024
No. 2025-05/196 Xu Shida, Review and Outlook of the Asian Securities Industry from 2023 to Mid-2024
No. 2025-06/197 John Zheng, Review and Outlook of the Asian Insurance Industry from 2023 to Mid-2024
No. 2025-07/198 Zhang Xuanchuan, Review and Outlook of the Asian Fund Industry from 2023 to Mid-2024
No. 2025-08/199 Chen Weidong, Review and Outlook of the Asian Monetary Policy from 2023 to Mid-2024
No. 2025-09/200 Chen Weidong, Review and Outlook of the Asian Fiscal Policy from 2023 to Mid-2024
