Financial Interconnectedness in Asia and the Pacific: Recent Shifts and Implications for Singapore
Selected Issues Papers, August 14, 2025
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Bibliographic details
- Authors: Tristan Hennig, Ritu Basu, Cristian Alonso, Wanying Li
- Published: August 14, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229020077.018
Key findings
- Asia's financial integration lags behind its trade integration.
- Financial integration in Asia is led by advanced economies such as Singapore.
- The FDI network closely resembles the trade network.
- The network for portfolio assets is dominated by advanced economies and contrasts with the FDI/trade network.
- Strong trade links boost FDI flows, but do not boost portfolio flows.
- Singaporean banks face cross-border and FX funding risks.
- The authorities continue to make efforts to mitigate these risks.
Linkages and network characteristics
- Trade network and FDI network: closely similar in structure.
- Portfolio asset network: dominated by advanced economies; differs from FDI/trade networks.
- Relationship between trade and financial flows:
- Strong trade links → boost to FDI flows.
- Strong trade links ↛ boost to portfolio flows.
Implications and risks for Singapore
- Singapore functions as a leading financial integrator in Asia.
- Singaporean banks are exposed to:
- Cross-border funding risks.
- Foreign exchange (FX) funding risks.
- Continuous policy efforts by authorities are in place to mitigate these bank funding and FX risks.
Authors, date, and publication context
- Authors: Tristan Hennig, Ritu Basu, Cristian Alonso, Wanying Li
- Date: August 14, 2025
- Series: Selected Issues Paper No. 2025/114
- Pages: 19
Source: Financial Interconnectedness in Asia and the Pacific: Recent Shifts and Implications for Singapore, Selected Issues Papers (August 14, 2025).
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- Sipea2025114