Experts expect the SCO Bank to focus heavily on infrastructure and development programmes for a start.
Chang of Fudan University described it as a natural extension of China’s Belt and Road Initiative (BRI), saying early emphasis would likely be on large-scale infrastructure projects.
“Infrastructure is usually the first thing people will think about,” Chang said.
He also noted discussions were emerging around “newer core technologies” such as rare-earth minerals, artificial intelligence, digital finance, and supply-chain logistics. “That might be further down the line though,” he added.
The SCO Bank could also ultimately serve purposes beyond financing, acting as a platform for regulatory cooperation or policy dialogue outside the orbit of US-led institutions like the IMF and World Bank.
“But it remains to be seen which parties will ultimately join, fund and engage,” Chang said.
LOOSENING THE DOLLAR’S GRIP
For many members, the appeal of an SCO Bank lies in its promise to ease dependence on the US dollar, experts said.
Most international loans and trade settlements remain dollar-denominated – and for now, the US dollar remains unrivalled as the backbone of the global economy.
According to IMF data, the dollar made up nearly 60 per cent of global foreign exchange reserves in 2024 – far ahead of the euro at 20 per cent, the Japanese yen at 6 per cent, the British pound at 5 per cent and the Chinese yuan at 2 per cent.
Although dollar share has slipped from its peak of 72 per cent of reserves in 2001 as foreign reserve managers diversify into other currencies, it still remains the dominant reserve currency.
Such dominance means that when the US Federal Reserve raises interest rates, the effects ripple across the world – triggering capital outflows, weakening local currencies and increasing the cost of dollar-denominated debt.
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