Speech

At the 2025 AMRO Forum in Hong Kong, SFC Chief Executive Julia Leung identified four structural forces defining Asia's evolving financial landscape: the rise of private credit, accelerating technological disruption, early adoption of tokenised finance, and the regionalisation of trade and capital flows. Her remarks underscored a system adjusting to new liquidity channels, new forms of risk, and increasingly digital market infrastructure.

The Rise of Private Credit

Tighter post-crisis capital requirements have limited traditional bank lending, accelerating the global expansion of private credit to around US$14 trillion in assets under management.
Leung noted that while this diversifies funding sources for corporates and infrastructure, it also introduces valuation opacity, leverage risks, and potential spillovers between fund managers, banks and real-asset exposures. Strengthened supervisory coordination within ASEAN+3 is becoming essential as private-credit strategies expand across the region.

Technology Reshapes Market Infrastructure

Algorithmic trading, machine learning and GenAI are now embedded across trading, advisory and compliance workflows. Their efficiency gains are evident, but they introduce vulnerabilities including model bias, cyber risks and dependence on a small group of technology providers.
Leung emphasised the need for clearer governance and human-in-the-loop oversight for high-risk AI uses, alongside early efforts to build quantum-safe infrastructure to safeguard future financial-data systems.

Tokenisation Gains Traction

Tokenised finance is moving from experimentation to early-stage deployment. Hong Kong's tokenised green bonds, tokenised money-market funds and digital gold products are creating pathways for on-chain subscription, redemption and settlement.
The market remains small—roughly US$3 billion—but cross-bank initiatives such as Project Ensemble point to emerging digital-settlement models that can reduce operational friction for global distributors, custodians and settlement intermediaries.

Regionalisation of Capital Flows

Developing Asia attracted more than US$600 billion of FDI in 2024, nearly 40% of global inflows. With supply chains and capital flows becoming more regionally concentrated, ASEAN+3 markets are integrating—but also fragmenting, as regulatory standards and liquidity structures diverge.
Leung noted that AMRO’s surveillance framework, supported by the BIS and the Hong Kong Monetary Authority, will be increasingly important for managing cross-border shocks and maintaining stability.