- China has proposed a plan for a New Development Bank within the Shanghai Cooperation Organization (SCO) to provide loans in local currencies.
- The initiative aims to reduce dependence on the U.S. dollar among SCO member nations.
- SCO consists of ten countries, including China, India, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan, Uzbekistan, and Belarus.
- Challenges remain due to economic instability in some member nations and existing tensions among certain countries.
- Experts caution that implementing this financial shift will be difficult for nations relying on Western support.
At the SCO Summit 2025, China, a member of BRICS, proposed that SCO Eurasian countries establish a New Development Bank to lend money in local currencies. The goal is to decrease the reliance on the U.S. dollar for international transactions across the region.
According to official reports, SCO Eurasian countries, many of which are also part of BRICS, agreed to move forward with plans for a new payment system. This system would help them bypass using the U.S. dollar and could reshape global financial trends in favor of developing nations. The organization presently includes ten member states, which are listed on the official SCO website.
Recent discussions highlighted key obstacles facing the plan. Some SCO countries, such as Pakistan, Iran, and Belarus, have low gross domestic products and depend heavily on economic assistance. Additionally, political differences—such as those between India and Pakistan or India and China—may affect unity.
The proposed bank and payment system seek to shift global finance away from Western influence, a move driven mainly by China. However, as noted in the source, “the formation of a new payment system in economically poor countries is difficult to achieve.” While the plan could benefit member countries, most still rely on Western support to maintain their economies, making full implementation a significant challenge.
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