The upcoming session of the Council of the SCO Leaders in July will include discussions on boosting the usage of national currencies in trade between member nations. This topic was previously addressed, and a plan was established during the organization’s summit in Samarkand in September 2022.
The SCO is currently one of the most extensive regional associations worldwide, providing unparalleled potential for collaboration between its participants on political, economic, security, humanitarian, and cultural matters. The organization is consistently evolving into a completely autonomous and self-sufficient structure, emerging as one of the “power centers” and actively contributing to the establishment of a multipolar world that caters to the interests of not only a select few developed nations but the entire developing world. However, the existence of an autonomous “power center” in present times necessitates the creation of novel financial arrangements that are to be supported by the currencies of the participating nations, rather than the dollar or the euro.
Today’s Western financial mechanisms are susceptible to and excessively influenced by politics. The dollar and the euro are investment currencies that carry out their functions according to the rules dictated by the United States, which regards neither China, India, Russia nor other SCO members as equal partners. In fact, the dollar and the euro have turned from a useful tool of international financial and economic relations into a lever of political blackmail and pressure that hinders world development. In this regard, the priority task of the Shanghai organization is to write its own rules in the financial sphere, which will allow it to use its own currencies in the world market.
The organization is already developing a road map for the transition to settlements in national currencies. The process is far from simple, as the dollar, unfortunately, is very deeply embedded, including in national currency systems. To give it up completely, we have to go quite a long way. But it must be done by all means. The SCO member countries simply must form new financial relations with the introduction of mutual settlements exclusively in currencies of the organization to gain full independence and to guard themselves from unfriendly machinations of the collective West.
The process of dedollarization is gaining momentum. In March, the Export-Import Bank of China signed its first deal on cooperation and loans with the Saudi National Bank. Furthermore, in March the UAE and China executed the first transaction using yuan for the provision of liquefied natural gas. The Central Bank of Iraq announced in February its plan to authorize payments for imports from China directly in yuan in the near future. Russia has already established calculations in local currencies with both China and India. Brazilian President Luiz Inácio Lula da Silva urged developing nations to substitute their use of dollars for their trade and international reserves with their respective national currencies.
The collapse of the Bretton Woods monetary system, the dissolution of the IMF and the World Bank, and the total abandonment of the euro and the dollar as global reserve currencies are impending.
The Western world does not like the new world order being formed, based on partnership and mutual respect. But if half a century ago the West could really dictate its will to humanity, now this will not work.
Fernando Gaillardo, a political observer, exclusively for the online journal “New Eastern Outlook.”