SCO members studying use of local currencies in settlement
BEIJING: Members of the Shanghai Cooperation Organization (SCO) are studying using local currency settlement while exchanging experience in financial areas, a move that experts said will be helpful to fend off US dollar hegemony.
The SCO disclosed the plan in a document it rolled out during the 21st meeting of the SCO Council of Heads of State. The meeting was held in the Tajik capital Dushanbe amid the 20th anniversary of its founding.
Dong Dengxin, director of the Finance and Securities Institute of Wuhan University, said that the use of local currencies could help the SCO member countries to bypass potential US sanctions, thus securing the region’s financial safety.
“By extending local currency settlements, SCO countries would lower the risk of being punished by the US via financial means, such as freezing US dollar assets involved in SCO countries’ trade”, Dong told the Global Times.
According to Dong, China and Russia are among the SCO members that are especially vulnerable to such risks, given the hostile political relations between them and the US at the current time.
This, plus China and Russia’s close ties and their large trading volume, would make local currency settlement easier to implement.
The SCO also agreed to expand the possibilities for exchanging experience in areas like national credit card systems and financial monitoring, as well as enhancing the role of the SCO in securing financial and economic cooperation, the document noted.
The SCO will also strive to create favorable conditions for developing the financial services market, attracting investment, and strengthening interaction between local financial markets.
Set up in June 2001, the SCO is a permanent intergovernmental organization that comprises eight member states including China, India, Kazakhstan, and Russia. TF Report