Reports this week suggest that China is currently considering a proposal to form a regional bank in order help its small and medium enterprises (SMEs) invest in Southeast and Southwest Asia.

It is believed that the new bank will fund infrastructure projects and promote development in China.

According to the Reuters report, once the bank is approved by the state council, or cabinet, China will invite members of the Asean, Japan and South Korea to each take a stake in the bank.

A source close to the Asean markets tells GTR: “This is the first time that we have seen this. There is a lot of speculation around China and Asean at the moment and the potential extension of the cross-border Rmb trade agreement to Asean countries in addition to Hong Kong, but there’s nothing firm except leaked reports.”

“Maybe it’s political posturing prior to the Asia Pacific Economic Cooperation (Apec) Leaders Meeting on November 12 and 13 in Honolulu, US, the source adds.