KUALA LUMPUR, Malaysia, 27 November 2025 — The 48th ASEAN Economic Association Meeting convened from 19 to 20 November 2025 in Kuala Lumpur, bringing together regional policymakers, economists, and academics to address this year’s theme: Enhancing ASEAN Resilience: Sustainability, Digitalisation and Inclusivity.
The event gathered senior leaders including His Excellency Dato’ Seri Abdul Rasheed Ghaffour, Governor of the Central Bank of Malaysia, and Dr Marco Larizza from the World Bank, alongside distinguished scholars from across Southeast Asia. Discussions centred on the future trajectory of ASEAN’s digital economy and its role in shaping inclusive, sustainable growth.
A particularly significant exchange took place during the plenary session on Digital Transformation and Inclusive Growth, where experts from the World Bank, the University of Malaya, and the Malaysian Digital Institute highlighted how digitalisation can expand financial inclusion.
It was here that Prof David Lee (CFtP®), Founding Chairman of the Global Fintech Institute (GFI) and Vice President of the Singapore Economic Association, delivered a pivotal intervention—one that shifted the conversation from opportunity to existential risk.
Prof David Lee (CFtP®) cautioned that beneath the promise of financial inclusion lies a structural challenge that ASEAN can no longer ignore: the region is entering a phase of “silent dollarisation”, fuelled by new United States legislation and an emerging digital financial architecture built beyond sovereign control. While these innovations bring real economic benefits, they also introduce far-reaching implications for monetary sovereignty, regulatory independence, and systemic stability.
Below is the full transcript of Prof David Lee (CFtP®)'s keynote speech, published as delivered.
Full Keynote Speech by Prof David Lee (CFtP®)
Good morning, everyone:
"Digital sovereignty"—we hear this term often. For ASEAN, this term carries a deeper ambition: the ability to shape our own digital destiny—to leverage technology for inclusive growth and build resilient economies that can withstand global shocks.
Today's speech promises a future of " genius." However, "genius" has two meanings: first, exceptional intelligence; second, the "spirit" or "way" that governs a system. This morning, I will argue that the future before us is not driven by our own genius, but rather requires us to navigate, or rather rely on, an external " way " —namely, the nascent form of a new digital financial architecture led by the United States. It brings us extraordinary opportunities for inclusion, but also introduces unprecedented strategic risks.
I will discuss this from the following three aspects:
- Geopolitical Shift: The global development trajectory has shifted from public central bank digital currencies to private, dollar-denominated stablecoins.
- Risk Transfer: US debt risk is quietly shifting to the ASEAN private sector, impacting our monetary sovereignty.
- Crisis Warning: If not addressed promptly, we may face a 21st-century financial crisis driven by crypto assets and AI.
I. Major Shifts in the Geopolitical Landscape
Looking back a year ago, the development momentum clearly favored central bank digital currencies (CBDCs). At that time, projects such as the Bank for International Settlements' " mBridge " offered an alternative to the dollar-centric system, outlining a vision of sovereign digital currencies reshaping international trade.
However, this vision is fading.
The root of this shift lies in the loss of political support for central bank digital currencies in the United States. Growing political opposition, fueled by concerns about surveillance and government overreach, has effectively ruled out the possibility of a digital dollar in the foreseeable future. This political shift has triggered a chain reaction at the global policy level, with even the traditionally proactive Bank for International Settlements shifting from high-profile advocacy to quiet restraint.
This gap is filled by stablecoins issued by the private sector.
This is precisely the first "brilliant" aspect of the new system architecture. While the US government has shelved the central bank digital dollar, the US Congress has passed the Clarity Act and the Genius Act, paving a clear regulatory path for privately-owned dollar stablecoins. The intention behind these acts is clear: to hand over control of the digital future of the dollar to the private sector, not the state.
Its influence is far-reaching:
- mBridge progress slows down.Public sector cooperation is becoming increasingly hesitant.
- The private sector is building entirely new de facto dollar payment channels on public blockchains.
This brings tangible benefits to ASEAN:Small manufacturers in Vietnam can receive payments instantly from Indonesian digital commerce platforms, bypassing the inefficiencies of traditional correspondent banking. This is true inclusivity.
II. Risk Frontier and Silent Dollarization
But we must be keenly aware of the underlying reality. As many ASEAN governments reduce their holdings of U.S. Treasury bonds, our private sector—businesses and citizens—is quietly becoming the new buyers of last resort. The surge in demand for stablecoins, backed by short-term U.S. Treasury bonds, is a surge in demand for U.S. debt. This shift is not occurring through sovereign balance sheets, but rather through widespread adoption by businesses and the public.
A stable U.S. economy is a global public good. Our concern is not with the debt itself, but with the structural problems behind it: information asymmetry, high concentration of capital, and the ability of a few global crypto giants to trigger mass capital flows across ASEAN markets in milliseconds.
New US legislation provides clear guidance:Approved stablecoins must be decentralized and operate on a public blockchain. This effectively permanently pegs the foundational layer of global digital currencies to US Treasury bonds.
What does this mean for ASEAN?As we adopt stablecoins to improve efficiency, the digital economy is undergoing a "silent dollarization." This not only increases our dependence on foreign monetary policy but also complicates our ability to independently tax, regulate, and manage capital flows.
The risks extend far beyond the payment sector:With the emergence of products such as interest-bearing stablecoins, automated market makers, maximum extractable value, liquidity mining, staking, and perpetual futures, we are building a highly leveraged, hyper-connected shadow financial system on top of the traditional financial system. Any regulatory changes in the US, the failure of major DeFi protocols, or a liquidity crunch in the stablecoin market could trigger instantaneous capital flows—shocks that our existing financial stability framework cannot handle.
III. Deep-seated Risks of Integrating AI with Crypto Assets
The financial industry is currently rife with the mentality that "everything can be AI-driven." However, our existing AI governance focuses more on ethical aspects than on system stability. When AI is combined with crypto assets and coded assets, we are actually creating a new class of autonomous, algorithm-driven market participants—AI systems that manage liquidity pools around the clock, engage in market arbitrage, and execute complex strategies.
This will create a new feedback loop:
AI-driven trading → volatile crypto markets → risks spilling over into traditional finance through tokenized real-world assets → ultimately impacting the real economy.
For the first time in history, AI-driven financial dynamics could shake up parts of an economy built on foreign sovereign debt. This is a new category of risk never before seen by humankind.
ASEAN's way to break the deadlock
The "brilliant" way to achieve digital sovereignty lies not in blindly embracing or completely rejecting it, but in navigating it prudently with clear thinking, coordinated actions, and firm goals.
We must certainly actively support digital transformation driven by AI, blockchain, and data analytics. But the focus must remain steadfast: privacy, security, financial stability, and building a human-centric digital economy.
Our "natural way" and "craftsmanship" should be reflected in three aspects:
- Accelerate the development of regional alternative payment systems Covering both wholesale and retail settlements, ASEAN needs its own sovereign digital backbone network to support trade—secure, interoperable, and independent. "Purpose Bound Money" is a viable path to maintaining the relevance of local currencies and enabling cross-border programmable trade.
- Establish a unified regulatory framework Focusing on transparency, consumer protection, reserve asset quality, and capital flow monitoring, we will build a unified ASEAN regulatory framework for stablecoins and crypto assets.
- Launch the "Digital Stability Framework" Build a forward-looking system to understand the systemic impact of DeFi contagion, algorithmic risks, and AI-driven markets before a crisis manifests.
Conclusion
The benefits of this transformation cannot be ignored, but the threats it poses to sovereignty and resilience should not be underestimated. Everything is still in its early stages, but perceptions are shifting rapidly—from once misunderstood Bitcoin as a money laundering tool to today's view of it as a national strategic reserve; from viewing stablecoins and Layer 1 and 2 blockchains as the technological backbone of large financial institutions to recognizing their potential to reshape the global financial architecture—we must immediately conduct extensive and in-depth research to truly understand the risks involved and the true meaning of "resilience" in the process of digital transformation.
The choice before us is not between technology and tradition, but between vulnerability and resilience; it is between becoming passive passengers in the new global system and actively steering our own future. The future of our digital finance must be shaped by our own hands—maintaining sovereignty, inclusivity, and unwavering perseverance. Now is the time to act.
Thank you everyone.
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