## 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

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### 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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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2025/08/14/financial-interconnectedness-in-asia-and-the-pacific-recent-shifts-and-implications-for-569706_