ERIA Research Project Report FY 2024 no. 22

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Table of Contents

• Executive Summary and Policy Recommendations 11
• 1. The Top Three Action Points 11
• 2. Potential Impact 12
• 3. The India–USAID FIRE Projects Example 13
• 4. Policy Recommendations 14
• 1.1. Indo–ASEAN FinTech Collaboration 14
• 1.1.1. General Consensus on FinTech Collaboration 14
• 1.1.2. Unified international financial marketplace 14
• 1.1.3. Locations of Market Facilities 15
• 1.1.4. Asset Classes and Market Segment 15
• 1.1.5. Digital Public Infrastructure (DPI) 15
• 1.1.6. ASEAN–India insurance hubs 16
• 1.1.7. Digital Payment Connectivity 16
• 1.2. Regulatory Ecology 17
• 1.2.1. Special and Differential Treatment (SDT) for market designs 18
• 1.3. Innovative Market Models 18
• 1.4. Human Capital 18
• 1.5. Special Capacity Advancement for CLMT 19
• 1.6. Asian Financial Integration 20
• 1.7. Summary Framework for Integrated Marketplace 20
• 1.7.1. The ASEAN–India Cooperation Pathway
 20
• 1.7.2. Working with ASEAN 21
• 1.8. Trickle Down Benefits 22
• 1.9. Strategic Roadmap for Implementing Recommendations and Advancing ASEAN–India FinTech Collaboration. 23
• Short-term Goals (1–2 years) 23
• 1.10. Steps for Implementation of Tiered Regulatory Frameworks 25
• Chapter 1 27
• Fintech Collaboration 27
• 1. Overview 27
• 2. Overview of the ASEAN–India relationship 27
• 2.1. The Current ASEAN–India Economic Dynamics 27
• 2.2. Impact and Opportunities in FinTech 28
• 2.3. India’s Strategic Role in ASEAN’s FinTech Landscape 28
• 2.4. Collaborative Pathways for a Unified Financial Marketplace 28
• 2.5. FinTech Adoption, Trends and Impact in the Region 29
• 3. FinTech as a catalyst for enhanced economic cooperation and market integration 31
• 4. India's capacities in Financial Technology (FinTech) and Digital Public Infrastructures (DPIs) 32
• 5. India's Capacities in Financial Technology (FinTech) and Digital Public Infrastructures (DPIs) 32
• 6. FinTech Capabilities and Digital Public Infrastructures in India vis-à-vis ASEAN 34
• 7. Digital Financial Services Infrastructure: Mobile Payment Systems: 35
• 8. Digital Financial Services Infrastructure: Online Banking Services: 35
• 9. Comparative assessment of current infrastructures in ASEAN’s larger and smaller economies. 37
• 10. Gaps and opportunities for India’s participation and technological contributions. 38
• 11. Current FinTech Collaborations between ASEAN and India 39
• 12. Regional Cooperation Frameworks 40
• 13. India's Involvement 41
• 14. Key Areas of Collaboration: Securities exchanges, Insurance hubs, Digital payment systems, real estate etc. 41
• 15. Areas of Enhanced Cooperation and Mechanism for India’s Participation 41
• 16. The Need of Creating a Unified, Technologically Advanced International Financial Marketplace 43
• 17. Opportunities in Creating a Unified Financial Market 44
• 18. Challenges in Creating a Unified Financial Market and Strategy to Overcome Them 46
• 18.1. Role of Digital Infrastructure in Supporting FinTech Innovation 48
• 18.2. Current Capabilities of Digital Infrastructure 48
• 18.3. Role of Digital Infrastructure in Supporting FinTech Innovation 49
• 18.4. Current Capabilities of Digital Infrastructure 49
• 19. The Role of Financial Markets in Economic Development and Growth 51
• 20. Future Needs for Digital Infrastructure 52
• Chapter 2 54
• Regulatory Ecology 54
• 1. Comparative Assessment of Regulatory Environment in ASEAN’s larger and smaller economies. 55
• 2. Regulatory Environment: Data Protection and Cybersecurity: 57
• 2.1. Digital KYC Practices 57
• 2.2. Similarities and Differences in Regulatory Frameworks 58
• 2.3. Challenges and Barriers: Regulatory Barriers Impacting Cross-Border Integration 59
• 2.4. Comparative analysis of policy adaptations needed to facilitate cross-border FinTech initiatives. 60
• 2.5. Special and Differential Treatment (SDT) 60
• 2.6. SDT for Market Designs Tailored to the Unique Economic Landscapes and Needs 62
• 2.7. Regulatory Hindrance in FinTech Adoption and Proposals for Bridging Them 64
• 2.8. Regional Regulatory Collaboration 65
• 2.9. Enhancing Regional Collaboration and Leverage the Strengths of ASEAN and India in the FinTech Sector 67
• 2.10. Selecting Optimal Locations for Market Facilities in the ASEAN and India Regions 69
• Chapter 3 71
• Innovative Market Models 71
• 1. How Hybrid Market Models can be Scaled or Adapted for Broader Impact 73
• 2. Integrated Commodities Markets 74
• 3. Over The Counter (OTC) Market Innovations: Tailored Financial Solutions 76
• 4. Leveraging These Innovations in ASEAN and India 77
• 5. Potential of Blockchain and Other Advanced Technologies in Fostering Transparency, Trust, and Efficiency. 78
• 6. Initiatives to Build and Upgrade Digital Infrastructure 79
• Chapter 4 81
• Human Capital 81
• 1. Strategic Overview of Employment Generation through FinTech Sectors in ASEAN and India. 81
• 2. Recommendations for human capital development, including training programmes and knowledge transfer initiatives. 82
• 3. Impact on Job Creation and Skill Requirements 83
• 4. Human Capital Development Strategies for Fostering a Skilled Workforce in the FinTech Sector 84
• Chapter 5 86
• Capacity Enhancement of CLMT 86
• 1. Special Capacity Building in Cambodia, Lao PDR, Myanmar, and Timor-Leste for advancing FinTech ecosystems. 86
• 2. Strategies for Enhancing Financial Inclusivity in CLMT (Cambodia, Lao PDR, Myanmar, Timor-Leste) 88
• 3. Potential Role of Indian Expertise in CLMT (Cambodia, Lao PDR, Myanmar, Timor-Leste) 89
• 4. Policy and Investment Recommendations for Special Capacity Advancement for CLMT 91
• Chapter 6 93
• Asian Financial Integration 93
• 1. Suggested Steps for Integration of Asian Economies (Focusing Smaller Islands) 95
• 2. Future perspectives and potential expansion to include other regional economies in East Asia and Oceania. 96
• Annexures 97
• Annexure 1 98
• The Blueprint for Regional Integration through Capital Market Mechanisms, Integration, and Development. 98
• Annexure 2 100
• Sample of Draft MoU between Participating Nations 100
• Annexure 3 102
• Summary Recommendations of the Indo–USAID Financial Institution Reform and Expansion (FIRE) Project 102
• Annexure 4 103
• Digital KYC Practices in ASEAN and India 103
• Annexure 5 105
• Potential Areas for Enhanced Cooperation: Capital Markets 105
• Annexure 6 106
• Harmonisation of Regulatory Standards: To simplify cross-border investments and ensure investor protection. 106
• Annexure 7 108
• Joint Ventures in FinTech Innovations: Focused on securities trading and investments, including blockchain technologies. 108
• Annexure 1. 108
• Annexure 8 109
• Shared Platforms for SME Financing: To leverage digital technologies for SME financing, including crowdfunding and peer-to-peer lending models. 109
• Annexure 2. 109
• Annexure 9 110
• Potential Areas for Enhanced Cooperation: Insurance 110
• Annexure 10 111
• Potential areas for enhanced cooperation: payments 111
• Annexure 11 112
• Regulatory Sandbox as an Effective Regulatory Strategy 112
• Annexure 12 113
• AFCFTA Initiatives and its Impacts in the African region: A Case Study 113
• Annexure 13 115
• Model of Market Integration and Outcome 115
• References 116