The SCO is close to establishing a bank—the issue hinges on moving away from the dollar

The member states of the Shanghai Cooperation Organization have resumed discussions on establishing the SCO Development Bank. One of the main obstacles to launching this financial institution remains the dependence of international trade on the U.S. dollar and the lack of a unified approach to settlements in national currencies.

Almaz Bukalaev, Kyrgyzstan’s SCO national coordinator, announced the resumption of negotiations while speaking at a forum of the organization’s think tanks.

According to him, the issue of establishing the Development Bank will be included in the economic agenda of the SCO summit during Kyrgyzstan’s presidency, alongside topics such as trade, investment, transport connectivity, and digitalization.

SCO Deputy Secretary-General Suhail Khan noted that the bank is necessary to finance large joint projects—primarily in the areas of logistics, transport corridors, and infrastructure.

“How can we trade if there is no logistics, no infrastructure? This requires significant funds,” he stated.

According to Khan, the idea of establishing a development bank has been under discussion for many years, but member countries were unable to reach a compromise for a long time. At various times, individual states opposed the initiative—both due to political disagreements and concerns related to sanctions risks.

Now, he said, the first round of negotiations is effectively complete, and the next stage of discussions is expected in the near future as part of the SCO summit.

One of the key issues remains the currency in which the future bank will operate. As Khan acknowledged, the countries are not yet ready to completely abandon the dollar, since global trade and international reserves remain largely tied to the U.S. currency.

Instead of an abrupt rejection of the dollar, the SCO is discussing a gradual transition to settlements in national currencies between individual countries. However, such a mechanism will require coordination of monetary policy, the creation of a common financial infrastructure, and time.

“It is impossible to abandon the dollar immediately. A transition period is needed for this,” emphasized the SCO Deputy Secretary-General.

At the same time, the organization expects that the creation of the Development Bank will allow SCO countries to jointly finance large-scale projects aimed at the entire SCO market, rather than just the domestic needs of individual states.