Tianjin, Sep.12,2025:The SCO Development Bank is emerging as one of the most talked-about financial institutions on the global stage. At a time when geopolitical tensions are high and nations are seeking alternatives to Western-dominated financial systems, this new initiative has the potential to reshape the global order.
Born out of the Shanghai Cooperation Organisation (SCO), the bank is not just another multilateral financial body—it symbolizes the growing desire of Eurasian nations to reduce dependence on the US dollar and create a multipolar world economy.
What is the SCO Development Bank
The SCO Development Bank is a proposed multilateral financial institution backed by China, Russia, and other SCO member nations. Its core mission is to provide infrastructure financing, boost trade, and create a stable financial alternative to Western-controlled institutions such as the World Bank and the International Monetary Fund (IMF).
According to Chinese officials, the bank will serve as a “new platform for multilateral cooperation” and will provide funds for roads, energy pipelines, hydropower plants, and cross-border transport projects.
A Decade in the Making
The idea of an SCO Development Bank was first floated by China in 2010. However, it faced resistance, especially from Russia, which preferred expanding its own Eurasian Development Bank (EDB).
Momentum picked up after 2022, when Western sanctions on Russia over the Ukraine war created urgency for alternative financial structures. By mid-2025, SCO leaders reached a “political consensus” to establish the bank, and during the Tianjin summit (August–September 2025), the plan was officially approved.
The Geopolitical Shift Behind the Bank
The launch of the SCO Development Bank comes at a critical juncture. Western financial sanctions against Russia, coupled with global dollar dominance, have triggered calls for financial sovereignty in Eurasia.
For China, the bank supports its Belt and Road Initiative (BRI), strengthening trade routes and supply chains across Eurasia. For Russia and Iran, both heavily sanctioned, the bank provides a much-needed lifeline to bypass Western systems.
How SCO Development Bank Differs from BRICS Bank
Although comparisons with the BRICS New Development Bank (NDB) are inevitable, the SCO Development Bank has unique characteristics:
- Stronger focus on Central Asia (Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan).
- Direct alignment with Belt and Road corridors.
- Higher emphasis on energy, transport, and connectivity projects.
- Potential headquarters in Central Asia, rather than China, to show inclusivity.
Ways SCO Development Bank Could Reshape Global Finance
1. Boosting Infrastructure in Resource-Rich Nations
Countries like Kazakhstan, Uzbekistan, and Kyrgyzstan are rich in natural resources but lack financing for infrastructure. The SCO Development Bank could provide capital for pipelines, mining projects, and hydropower plants.
2. Reducing Dollar Dependency
One of the bank’s main goals is to cut reliance on the US dollar. By encouraging settlements in Chinese yuan (renminbi) and local currencies, it could slowly weaken the dominance of Western currencies.
3. Expanding China’s Belt and Road Initiative
Through financing highways, railways, and ports, the SCO Development Bank will strengthen China’s BRI and cement its economic leadership in Eurasia.
4. Supporting Sanctioned States Like Russia and Iran
For Russia and Iran, both hit by Western sanctions, this bank provides a financial shield. It allows them to borrow, invest, and trade without relying on Western institutions.
5. Financing Energy and Transport Corridors
Energy pipelines, electricity grids, and transport networks across Eurasia could be financed directly, ensuring energy security and trade expansion.
6. Attracting New Members from Asia and Africa
Analysts predict that countries in Southeast Asia and Africa could seek membership, making the SCO Development Bank a global South powerhouse.
7. Promoting Multipolar Global Order
Above all, the bank symbolizes the push for a multipolar financial system—one where no single power dominates.
Challenges Facing SCO Development Bank
Despite its promise, the SCO Development Bank faces hurdles-
- Diverging interests of China, Russia, and India.
- Risk of US sanctions or trade retaliation.
- Ensuring credibility and transparency in lending.
- Competition with BRICS Bank and AIIB (Asian Infrastructure Investment Bank).
India’s Ambivalent Stance
India’s position on the SCO Development Bank remains cautious. While New Delhi supports multilateralism, it is wary of China’s dominance and fears antagonizing the US.
Analysts argue India may prefer to focus on bilateral infrastructure deals rather than fully embrace the bank.
The US and Western Response
The US views the SCO Development Bank as a direct challenge to its financial supremacy. Washington has in the past threatened tariffs and sanctions on countries that attempt to bypass the dollar system. Similar reactions could be expected if the SCO Bank grows rapidly.
Can SCO Bank Redefine Global Finance
The SCO Development Bank has the potential to become a transformative institution. By reducing dollar dependency, boosting regional connectivity, and supporting sanctioned economies, it could usher in a new financial era.
However, its success will depend on member unity, governance transparency, and resilience against Western pushback.
The creation of the SCO Development Bank marks a historic moment in global finance. More than just a financial body, it represents a broader vision—healing the financial divides of Eurasia and honouring the economic roles of emerging powers.
If implemented effectively, this institution could tilt the balance of global finance away from unilateral dominance toward a fairer, multipolar world order.
