SEACEN: Eye on The South East Asian Central Banks Research and Training Centre

Posted on Jan 30, 2023 by Ayse Sungur, Senior Financial Sector Specialist, The South East Asian Central Banks (SEACEN) Research and Training Centre


A Very Short Introduction to SEACEN

The intention of setting up a centre for monetary studies and training in the Asia-Pacific region dates back to 1967. The South East Asian Central Banks (SEACEN) Research and Training Centre was ultimately established as a Malaysian legal entity in 1982. Currently, SEACEN reaches out to 35 central banks (19 member central banks, 8 associate members, and 8 observers), and the Centre collaborates with 28 strategic partners in the areas of macroeconomic and monetary policy management, financial stability, banking supervision and regulation, and payments, as well as central bank governance, leadership, and human capital.

Altogether, SEACEN stakeholders, of which Southeast Asian central banks form an integral and essential part, represent a very large geographical area. To put it in perspective, the current population of Southeast Asia is equivalent to 8.58 percent of the total world population. The median age is 30.2 years and 50 percent of the population is urban. These figures alone indicate a very dynamic and heterogeneous region with divergent financial market infrastructures that have different needs when it comes to payments and settlements. Against this backdrop, SEACEN has been providing a platform for a broad range of stakeholders to discuss timely and emerging policy issues, trends, and the impact on the role of central banks in the dynamic world of payments and settlements.

Supporting the SEACEN Community

To facilitate the exchange of views and knowledge in the region, SEACEN will offer the following payment courses (among others) in 2023: (1) Large-Value Payment Systems and Financial Market Infrastructure; (2) Retail Payments; (3) Cross-Border Payments, Innovations, Payments, and Central Banks; and (4) Central Bank Digital Currency (CBDC) and Stablecoins.

In this context, the coverage will include current topics of interest to all, such as CBDC, fintech, crypto-assets, innovations in retail and cross-border payments, decentralized finance (DeFi), interoperability, climate risk resilience/ sustainable finance, and cybersecurity. Along the way, regulatory developments will be discussed thoroughly with experts from the industry, academia, and regulators during The SEACEN online and in-person seminars, courses, and conferences. Throughout the courses, central bank senior management and junior staff are provided with best practices and knowledge that they can use to tackle various challenges related to payments and settlements in their jurisdictions.

Financial services, particularly payments, have been significantly redefined over the years by various drivers, such as constant high-speed changes in technology. Moreover, the rise in cross-border capital flows and trade, in addition to changing consumer habits in e-commerce and payments, have paved the way to expansion in the payments industry, prompted by incumbents and new players.

Accordingly, when designing payments courses, the Centre must cater to participants with different needs and objectives depending on their jurisdictions. Considering the intensifying attention given to the global evolution in payments—as well as the unceasing demands for better, smarter, faster, and inclusive payments and the impact of these demands on central banks—supporting the broad SEACEN community is by no means an effortless task. It calls for, among other things, continuous monitoring of financial innovations and trends globally, keeping track of changing demands from businesses and consumers, collaboration with standard setters and the payments industry, and observing the activities of the broader ecosystem of payments and settlements while keeping a constant eye on regional developments and needs.

Keeping Pace with Digital Payments

To enhance payments and settlements, digitalization is a prerequisite. Acknowledging the benefits of digitalization but staying cautious is a delicate balancing act for all central banks. Some of SEACEN’s stakeholders have open markets and thus act as regional gateways for many innovative businesses. Owing to this, they are able to observe early signs of new trends and innovations and can adapt accordingly via regulatory change initiatives. These initiatives inspire discussions on how to assess and regulate payment services with new business models. Among stakeholders, some are in favor of activity-based regulatory regimes, whereas others lean more towards an entity-based approach.

Nevertheless, the common denominator is the challenge to keep pace with the rate of innovations, an increase in emerging hybrid solutions, and the growing number of players. As such, staying well informed with updated expertise and knowledge is a sort of marathon in this complex area, especially in terms of risk mitigation. In regards to advancing expertise and knowledge, The SEACEN Centre has an unparalleled track record in playing an instrumental role when it comes to supporting stakeholders.

There are various developments and discussions that stand out in the region. Among the top issues observed by the Centre are whether crypto-assets and stablecoins are going to be disruptive or remain as niche products, the need for cooperation on improving cross-border payments and regional payment connectivity, the increasing adoption of digital payments as a privacy risk in relation to the amount of personal data linked to payments data, and improving digital financial literacy and access to digital financial services. Finally, CBDC and related activities remain of key interest and are explored through courses and high-level conferences. Certainly, this is by no means an exhaustive list.

The expansion of new payment technologies leads to a more complex set of systems and technical standards with considerable variation by country. Consequently, a lack of interoperability between those standards has created additional friction in the management of cross-border digital payments, some of which are being addressed via bilateral agreements. The central banks of Indonesia, Malaysia, Philippines, Singapore, and Thailand have recently agreed to strengthen and enhance cooperation on payment connectivity to support faster, cheaper, more transparent, and more inclusive cross-border payments. Through our courses, we help to build awareness around the Financial Stability Board’s (FSB’s) roadmap for enhancing cross-border payments. A challenge noted by our members relates to the fact that the region’s central banks are at different stages of development and, as such, may seek to prioritize different aspects of the FSB’s roadmap.

With reference to crypto-assets, adoption by consumers could depend on the jurisdiction and how the payment landscape is organized. As for stablecoins, there may be use cases for institutions employing them for settlement or perhaps in DeFi applications. It remains to be seen whether stablecoins can offer benefits beyond the existing fiat money. Although crypto-asset providers are subject to anti-money laundering (AML) laws and regulations in some jurisdictions, there is no meaningful user or investor protection in place yet. It is necessary to closely monitor the area in order to determine what kind of consumer and/ or investor protection might be needed.

On the issue of cybersecurity, consumer protection, data privacy, and competition, some of our course participants have noted that financial data-related restrictions could serve as a barrier to market entry and operations for payment service providers (PSPs). The financial data-related restrictions could limit the ability of payment service providers to grow and succeed in the market.

Some examples include:

  1. Regulatory requirements: PSPs may be required to obtain certain licenses or approvals in order to operate in a particular market. For example, they may need to obtain a money transmitter license, which can be a lengthy and costly process.
  2. Data privacy and security: PSPs may be required to adhere to strict data privacy and security regulations, such as the Payment Card Industry Data Security Standard (PCI DSS). These regulations can be complex and may require significant resources to implement and maintain.
  3. Access to financial data: PSPs may have limited access to financial data, either due to regulatory restrictions or because financial institutions are unwilling to share data. This can make it difficult for PSPs to develop new products and services and effectively compete in the market.
  4. Interoperability: PSPs may face challenges in connecting with other financial systems, such as banks and payment networks. This can make it difficult for them to offer their services to a wide range of customers and may limit their market potential.
  5. Competition: PSPs may face competition from established players, which can make it difficult for them to gain a foothold in the market.

In the matter of privacy and data, increasing fragmentation in the payment chain could expand privacy risks. Because data can end up in different places and be used for different purposes without the explicit consent of individuals, the social task of protecting citizens and their personal data in a digital society is therefore extensive and complex. The world we live in is data-driven and in this world data is recorded continuously. As a result, there is much more data available than ever before. On top of that, the data is diverse, more specific, and profound. Through our courses, we stress the significance of the fact that innovation must go hand-in-hand with the protection of personal data. Therefore, new technologies intended for use in financial services should prioritize privacy by design and privacy by default.

CBDCs may be one of the most significant recent innovations in central banking. According to the latest Bank for International Settlements (BIS) Survey on CBDC, responses from 81 central banks show that 90 percent are exploring costs and benefits of CBDC, 62 percent are conducting experiments or proofs-of-concept, and 26 percent are currently developing a CBDC or running a pilot. SEACEN members are at the forefront of CBDC research and pilots. Moreover, our members cooperate with the BIS Innovation Hubs in various experiments like Project mBridge and Project Dunbar. The SEACEN Centre began offering insights on CBDC during high-level conferences and payments courses and through podcasts and blog posts back in 2018. In 2023, a full-fledged CBDC course will be offered to bring participants up to speed, paired with a Conference and Meeting of Directors of Payments from throughout the region.

The SEACEN Centre will continue to provide a platform for its members engaging in different state-of-the-art activities as the future of payments is still being developed, and it is yet to be seen how the technology will evolve and be adopted into common use, affecting regulatory developments as well.


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Education, Training, Infrastructure, CBDC, Cross-Border Payments, Retail Payments