Asia's banking sector will begin to rapidly dwarf the banking sectors of Europe and the US from 2020, and will be more than double their combined size by 2030, analysis by ANZ projects.Shanghai would be the world's dominant financial centre within 10 years, rivalling New York, said Warren Hogan, ANZ chief economist, yesterday.Tokyo, Seoul and Hong Kong would also be important, while Sydney would rate an honourable mention.ANZ expects banking assets in Asia to be US$84 trillion in 2030, with US$22 trillion in Europe and US$16 trillion in the US.The context of the report is an effort by ANZ to drive dialogue on structural, and potentially regulatory, reform of financial services in Asia.The Asian financial sector "has developed much more slowly than the industrial economy," ANZ said in the report, principally written by Hogan."Indeed, there will be no Asian Century unless we see a dramatic transformation of the Asian financial system," he wrote.ANZ chief executive Mike Smith told a media briefing in Hong Kong:"We need a conversation about what sort of financial system we need to achieve this." "Our whole super regional strategy is about taking advantage of this opportunity."ANZ pointed out that over the past 15 years, "a gap has appeared between the development of Asia's underlying economy and its financial sector. Following the Asian financial crisis of 1997, growth in many Asian nations was constrained by strict regulation, managed exchange rates and the accumulation of large FX reserves."Despite a rapidly growing pool of domestic savings, Asia has relied heavily upon international financial markets to allocate these savings rather than developing its own capital markets."Hogan said he expects much more "balance", meaning more active debt and equity markets.Banks, he said, would need to shift from providing long-term finance to focusing on smaller business and the middle class.Hogan said his base case was predicated on progress in financial sector reform and political stability.There is an element of boosterism in the report; for example, ANZ projects there is "a significant opportunity for Sydney to develop into one of the region's key renminbi trading centres.""Sydney is uniquely positioned to build a deep pool of RMB liquidity given the significant trade flows that exist between Australia and China."ANZ point out that Australia's commodity exports are largely denominated in US dollars "but China is actively seeking to invoice new trade flows in RMB.""Australian authorities should be considering the currency denomination of future commodity invoicing in renminbi and growing a renminbi deposit base in Sydney will be important," the bank said.Part of the solution lies in ANZ's hands.The bank also called for "streamlining trade and reducing transaction costs between Australia and China as well as developing a more internationally oriented commercial banking system."