By Zhijiang Zhao
In recent years, the global landscape has shifted from a focus on globalization and integration toward a new phase characterized by fragmentation and deglobalization. Persistent geopolitical tensions and structural pressures have increasingly pushed countries toward regionalism, leading to a fundamental transformation in the financial sector. One clear trend is emerging: the global financial industry is becoming more regionally driven. Among global regions, Asia, with its vast scale, diverse economies, and complex institutional ecosystems, now stands at the forefront of this transformation.
As a whole, Asia can be divided into four main regions for analytical purposes: East Asia, Southeast Asia, South Asia, and Central Asia. This categorization excludes areas such as the Middle East and Russia’s Far East, which fall outside the traditional geographic and economic scope of Asia. Each of these regions should be studied systematically to evaluate their financial potential and competitiveness.
Recent data and trends suggest that Asia’s financial landscape is taking on a distinct regional structure. East Asia is emerging as the leading financial center, followed by Southeast Asia and South Asia as secondary hubs. Central Asia is increasingly playing a bridging role. This new configuration reflects differences in financial development, regulatory maturity, and institutional innovation. It also offers valuable insights for China’s evolving strategy on regional financial cooperation.
East Asia: The Core of Asian Finance
East Asia has the most developed capital markets and regulatory systems in Asia. As of 2024, nearly 29,000 companies were listed in Asian markets, accounting for 27 percent of global market capitalization, with approximately 60 percent of them based in East Asia. The region leads in both financial technology and green finance. For example, China’s Cross Border Interbank Payment System now extends settlement services to 187 countries and regions, with more than 4,900 participating banks. In green finance, China issued over 681 billion yuan in green bonds in 2024 alone. At the same time, new standards such as the Specifications for Green Bond Environmental Benefit Information Disclosure Indicators are helping to shape international rules and bolster China’s influence in the global financial system.
Japan and South Korea remain highly competitive players despite demographic challenges. Both countries have made significant progress in retirement finance. Japan’s Government Pension Investment Fund and South Korea’s National Pension Service have adopted professional investment strategies and are leading the way in the digitalization of retirement systems. Their pension funds also serve broader functions, including roles in domestic monetary stability.
Southeast Asia: A Rising Sub Center
Southeast Asia is emerging as a regional hub for capital flows and institutional development. Singapore has positioned itself as a neutral platform among dollar, yuan, and euro assets. With its advanced financial infrastructure and regulatory environment, it continues to attract global capital and serve as a base for multinational operations. At the same time, countries such as Vietnam, Indonesia, and Thailand are seeing growing domestic demand for financing, driven by manufacturing realignments and expanding middle-class populations. These shifts are prompting the evolution of local financial ecosystems.
Nevertheless, major challenges remain. Institutional differences and uneven macroeconomic stability hinder deeper regional integration. Moreover, telecom fraud has become a significant risk, affecting financial stability and undermining regional credibility.
One promising area is digital finance. Stablecoins are gaining traction across the region, particularly in remittance services and e-wallet platforms. A successful case is Coins.ph in the Philippines, which highlights the potential of digital tools to expand financial access and reduce transaction costs. As legal frameworks improve and digital infrastructure develops, Southeast Asia may become a global leader in digital financial services.
South Asia: A Digital Finance Powerhouse
South Asia’s financial momentum is primarily driven by India. As one of the fastest-growing large economies, India has made significant advances in financial technology, digital identity, and payment systems. Its Unified Payments Interface now handles tens of billions of transactions each month and serves over 400 million users. The Aadhaar system provides digital identification for 1.2 billion citizens, making it the largest digital identity program in the world. These systems form a robust digital finance infrastructure, which India is increasingly looking to extend to neighboring countries.
Other South Asian nations are exploring their own financial development models. Bangladesh is using green bonds to deepen its capital markets. Sri Lanka, recovering from a severe debt crisis, is working with the International Monetary Fund to build a more modern financial governance system. Pakistan has made notable progress in promoting mobile payments and issuing digital banking licenses. Its youthful population creates a favorable environment for fintech development. Still, these countries face structural challenges, such as smaller markets and weaker institutional frameworks, that limit their growth relative to India.
Central Asia: The Strategic Bridge
Central Asia, comprising five nations, holds strategic value as a corridor for financial and economic exchange between Asia and Europe. This role is not just geographic but also institutional. Kazakhstan’s Astana International Financial Centre, for instance, has adopted a common law-based legal system, enabling smoother cooperation with both Eastern and Western investors.
Central Asia is also exploring new avenues such as green finance. While the region has a relatively small market size and still struggles with institutional stability, its significance is growing. As China’s Belt and Road Initiative advances, Central Asia is becoming more closely integrated into the regional financial framework. This development has strategic importance for China’s western provinces, which stand to benefit from stronger cross-border financial links and enhanced access to global value chains.
Toward a New Regional Financial Order
Asia’s regional financial architecture reflects the natural evolution of distinct institutional models and development trajectories. In an era increasingly shaped by deglobalization and regionalism, future financial leadership will depend on three key factors: the ability to establish dominant institutional frameworks, the capacity to control capital pricing mechanisms, and the influence to shape cross-border financial rules.
A clear regional structure is already taking shape. East Asia stands as the core, while Southeast Asia and South Asia are growing as influential sub-centers, and Central Asia is emerging as a vital strategic bridge. Understanding and adapting to this new structure will be critical for countries seeking to play a leading role in the next stage of global financial competition.
About the author: Zhijiang Zhao, Research Fellow for Geopolitical Strategy programme at ANBOUND.
