Asian countries should cooperate with each other to push the reform of the quota system of the International Monetary Fund, in order to better reflect the status of Asian countries in the global economy and give emerging markets and developing nations a greater say in the global financial system, said Pan Gongsheng, governor of the People's Bank of China, the country's central bank, at the Boao Forum for Asia Annual Conference 2024 on Wednesday.

"Asian countries can push all parties to reach a consensus on a new quota share formula as soon as possible, in order to lay the foundation for realizing quota share adjustment. The adjustment can ensure that the IMF is a rules-based institution that truly practices multilateralism," Pan said.

The IMF is a quota-based international financial institution where the size of the quota determines the IMF's crisis relief capabilities, while quota share determines the voting rights of member countries in the IMF and the scale of financing they obtain. The adjustment of quota share is crucial to the IMF's governance, representativeness and legitimacy.

"The quota share adjustment is an inevitable requirement to improve the IMF's governance structure and enhance the IMF's duty performance capabilities," Pan said in his keynote speech.

The central bank governor said the functions of the Chiang Mai Initiative should be further refined to enhance the resilience of the global financial market to withstand external risks. Established in 2000, the initiative introduced local currency investment terms on top of US dollar loans, and provides more financing channels and options.

Pan also emphasized the positive role of bilateral currency swaps in promoting bilateral trade and investment, and in providing the supplement of a global financial safety net. The central banks of major economies have provided emergency liquidity support to alleviate the volatility of the financial markets effectively during turmoil in international financial markets or banking crises in some countries.

"As Asia's economic integration deepens, its demand for local currency settlement increases, and the scale of bilateral currency swap cooperation continues to expand. At present, the scale of bilateral currency swaps between the 10 countries of ASEAN (Association of Southeast Asia Nations) and China, Japan and South Korea in the region has exceeded $380 billion," Pan noted.

The PBOC currently has bilateral local currency swap agreements with the central banks or monetary authorities of 29 countries and regions, with a total swap scale of more than 4 trillion yuan ($553.4 billion), Pan said.

He also pledged that China will improve the construction of domestic financial safety nets so as to provide an important guarantee for improving economic resilience and prosperity of Asian economies.

Eddie Yue Wai-man, chief executive of the Hong Kong Monetary Authority, highlighted that the Asian region is promoting the development of central bank digital currencies.

"The mBridge will conduct trial trade settlements next month with the participation of 20 central banks that could reduce transaction costs and time, and would be the smoothest cross-border central bank digital currency settlement system, setting a precedent in the world," Yue said.

Yue hoped that through such pilot programs, liquidity and various types of infrastructure can be further improved and the framework further expanded. "I believe that a very effective network will be established in the future, and local currency can be used for instant settlement when conducting cross-border settlements."