Shanghai Cooperation Organisation Photo: VCG

China on Tuesday proposed to expand the share of local currency settlement among member countries of the Shanghai Cooperation Organisation (SCO) at the SCO summit via video link. 

In addition, the Chinese side also suggested expanding the cooperation on the sovereign digital currencies and promoting the establishment of an SCO development bank. The proposal was made by the Chinese top leader while attending the SCO summit via video link. Experts said the proposals will further bring emerging economies together, while highlighting the use of the local currency settlement in the SCO as a significant move toward that process.  

The proposed measures will play a significant role in connecting the emerging economies, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Tuesday, adding that organizations including the BRICS and the SCO have become indispensable for the development of emerging economies and contributed to the global development. 

Xi Junyang added that the establishment of the SCO development bank will be an important mechanism to link members' economies to further promote investment and boost mutually beneficial economic exchanges. 

SCO members have been stepping up efforts to boost the use of local currencies especially amid the rising wave of de-dollarization against US hegemony. Russian President Vladimir Putin on Tuesday said that more than 80 percent of commercial transactions between China and Russia are already carried out in the ruble and the yuan, the Sputnik reported. 

Another latest move came as India refiners began paying for some oil imports from Russia in the yuan, according to a Reuters report on Monday, noting that Indian Oil Corp, the country's biggest buyer of Russian crude oil, became the first state refiner to pay for some Russian purchases in the Chinese currency. 

Xi Junyang said that it is a major progress for the SCO that a member country's currency is being used for settlement. He added that the promotion of local currencies will further elevate the cooperation among the members. 

As China plays a huge part in the SCO amid the growing popularity and internalization of the yuan with its payment advantages, the use of the yuan among the SCO members reflected the progress of yuan internationalization, said Xi Junyang, adding that it will also elevate the process to the next level. 

The central banks and finance ministries of the SCO member states have begun drawing up a roadmap to use national currencies in mutual settlement, SCO Secretary-General Zhang Ming said earlier in May. 

Zhang noted that the SCO attaches great importance to pushing forward economic cooperation, and an expert group is working on creating conditions to realize this goal.

In January 2023, a service center targeting the cross-border yuan financing and settlement for the SCO markets has been officially put into operation and has completed the first yuan cross-border settlement, according to media reports, marking a milestone for establishing a yuan-settlement mechanism within the organization.  

Global Times