Will the emerging powers launch their own development bank?

Will the emerging powers launch their own development bank?

The Moscow Times reports that Russian prime minister Dmitry Medvedev wants the Shanghai Cooperation Organization to finance projects jointly:

Prime Minister Dmitry Medvedev on Wednesday called for the countries of the Shanghai Cooperation Organization to speed up work to create mechanisms to finance joint projects.

The organization, which comprises Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, is considering various financing options, including ones involving existing banking institutions as well as new mechanisms, he said, Interfax reported.

Medvedev, who met with his SCO counterparts in the Kyrgyz capital, Bishkek, said that "this would allow for more effective investment in joint economic projects," according to the news agency.

This gambit is just one of several suggesting alternative, emerging-power-led multilateral mechanisms for international finance. There are continuing rumblings about a possible BRICS Development Bank that could serve as an alternative to the World Bank. 

It’s not likely either mechanism will take off soon. For both possible projects, China’s wishes will be decisive. And how keen Beijing is to set up new multilateral mechanisms remains unclear. In October, The Hindu reported that Chinese officials have real doubts about a BRICS bank:

[T]he Chinese government brought together officials, economists and members of think-tanks from the five countries to hear concrete proposals about setting up the development bank, at a recent conclave in the south-western municipality of Chongqing. The five governments had tasked think-tanks to come up with ideas following the decision at the Delhi Summit in March to examine the feasibility of a development bank.

Xu Qinghong, section chief of the Banking Supervision Department at the China Banking Regulatory Commission, said he had some concerns about getting all countries on the same page and “non-economic factors” that might pose obstacles. “There are vast differences between us,” Mr. Xu said. “Looking at the history of other multilateral institutions, I think such a feasibility study will take a long time and it may test our patience. Since the Delhi Summit, so far in China there have been a lot of doubts about a proposal.”