Russia Backs China’s Vision for Sanction-Proof SCO Development Bank
China has secured Russia’s backing to establish the long-proposed Shanghai Cooperation Organisation Development Bank in Central Asia.
The Wall Street Journal reports the new financial institution will use the yuan as its primary currency. Moscow blocked the initiative for more than a decade to prevent Chinese economic expansion into its traditional sphere of influence. However, Russia recently compromised in exchange for guarantees that the bank will operate independently of Western sanctions.
Russia previously relied on the Eurasian Development Bank to manage regional investments. While Moscow originally controlled 66% of the EDB, it reduced its stake to 44.8% in 2023 to mitigate sanction risks. Kazakhstan now holds a 37.3% share alongside Armenia, Belarus, Kyrgyzstan, Tajikistan and Uzbekistan.
Russian officials historically viewed a separate SCO bank as redundant. In 2015, former EDB head Dmitry Pankin warned that creating another institution alongside the BRICS bank and the EDB would stretch specialist resources. Chinese officials consistently argued the institutions would complement rather than compete to support regional economic growth.
Shifting financial dynamics
Moscow’s position shifted dramatically following its 2022 invasion of Ukraine. Existing international financial organisations with Chinese involvement failed to shield Russia from Western penalties. Russian operations faced restrictions within both the Asian Infrastructure Investment Bank and the BRICS New Development Bank.
In early 2026, Russian Deputy Foreign Minister Sergei Ryabkov expressed dissatisfaction with certain operational aspects of the BRICS bank. This frustration culminated at the September 2025 SCO summit in Tianjin, where member states officially announced the new bank’s creation and initiated launch consultations.
Russian Finance Minister Anton Siluanov stated the new entity must function without Western currency limitations. He revealed that Moscow and Beijing discussed outfitting the bank with a proprietary depository infrastructure, allowing member states to trade financial instruments freely.
A memorandum of understanding is expected in August ahead of the next leaders’ summit. The bank offers Russia a crucial mechanism to bypass international sanctions. Conversely, the project serves Beijing’s broader strategic goal of cementing its position as the dominant economic power in Central Asia, potentially drawing former Soviet republics like Kazakhstan and Uzbekistan closer to China.
