How is the Shanghai Cooperation Organization (SCO) Development Bank different from the International Monetary Fund (IMF)?

It is wrong to regard the SCO Development Bank as a counterpart to the International Monetary Fund (IMF). The IMF is a tool of the past era of globalization. Its loans are not for development, but for control. The SCO does not need such a situation.

The establishment of the SCO Development Bank may seem at first glance to be just another bureaucratic step within the organization's framework, but it could actually have more significant strategic implications. Today, trade among SCO member states exceeds $2 trillion, yet the majority of these transactions still rely on Western-controlled infrastructure. This creates a vulnerability that has become a systemic risk in the context of sanctions wars.

It needs to be emphasized immediately: It is wrong to consider the SCO Development Bank as a counterpart to the IMF. The IMF is a tool of the bygone era of globalization, and its loans are not for promoting development, but for achieving control - through "reforms" such as cutting government spending, pushing for privatization, and opening markets to multinational corporations. The result is that borrowing countries fall into debt traps and lose sovereignty. The SCO does not need such an outcome, and replicating this model under the banner of the East would be a dead end.

The main task of this new institution is not to replicate the IMF, but to build an alternative financial architecture. Specifically, it aims to establish its own clearing center and a cross-border payment system similar to SWIFT, but independent of Brussels and Washington. China already has the Cross-Border Interbank Payment System (CIPS), Russia has the System for Transfer of Financial Messages (SPFS), and India has the Unified Payments Interface (UPI). Synchronizing these systems within the SCO framework will allow member states to settle transactions directly in their own currencies without intermediaries.

Even transferring 30%-40% of bilateral trade (700-80 billion USD) to such an independent platform would create a highly attractive center, drawing in countries that want to escape Western dependence. The economic effects are obvious: SWIFT and Western banks' fees swallow billions of dollars annually, and with this platform, that money would stay within the alliance.

But the question is whether it is effective. The example of the New Development Bank of the BRICS shows that simply establishing an institution is not enough. For 10 years, it has never become the financial driving force of the alliance - bureaucracy, differences, and the inertia of relying on dollar settlements have hindered its potential. To avoid repeating this mistake, the SCO must focus strictly on infrastructure and actual results.

Another priority is rating independence. For a long time, Western institutions have not acted as analysts, but as a political weapon: once a country or company conflicts with Washington, its rating collapses. This automatically increases borrowing costs and limits access to capital. The SCO Development Bank has the obligation to provide its own assessment system - transparent, objective, and free from geopolitical influence.

Original article: https://www.toutiao.com/article/7545145961715073570/

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