Shanghai Cooperation Organization (SCO) follows BRICS in seeking to reduce its dependence on the US dollar
As the BRICS countries continue to advocate for the de-dollarization of international trade, the Shanghai Cooperation Organization (SCO) is following suit, announcing initiatives aimed at reducing the influence of the US dollar in transactions between its members. This dynamic is indicative of the new geopolitical alliances emerging on the international scene, marked by the desire of emerging countries to achieve independence from the United States. The SCO’s Dynamism and its Members The SCO, founded in 2001, brings together major countries such as China, Russia, and India, while also integrating other Central Asian nations, such as Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan. In 2024, Pakistan and Iran (already a BRICS member) joined this consortium. These countries, united by common economic and political interests, seek to balance the dollar’s dominance in international trade. A Common Payment System: The First Steps In a recent interview, Zhang Ming, Secretary-General of the SCO, announced the launch of discussions for the creation of a common payment system among member states. This alternative to the dollar could facilitate trade based on national currencies, thus reducing the complexity of foreign currency transactions, which are predominantly dependent on the US dollar.The political and economic motivations behind this initiative The motivations behind this quest for de-dollarization are multiple. On the one hand, US sanctions imposed on certain SCO members are pushing these countries to explore options less dependent on a system dominated by Washington. On the other hand, the rise of Asian economies, which are seeking to strengthen their cooperation, is also encouraging the diversification of payment methods. Consequently, the SCO initiative could be part of a broader strategy to transform economic relations between these nations. Involvement of the Private and Interbank Sectors Beyond government discussions, the SCO also invites private sector actors, particularly banks and businesses, to participate in this de-dollarization process. Working groups have been created to assess how these institutions can work together to minimize the use of the dollar in cross-border trade. Interbank cooperation is therefore crucial in this context, in order to lay the foundations for a transaction network that does not rely on the US currency. Security and Strategic Issues
This development is not simply an economic issue; it also has security dimensions. By strengthening their alliances, SCO members hope to counter US political influence in the region. The organization aims to provide an alternative platform to NATO and other Western initiatives, thus positioning Eurasian countries as key players on the world stage. De-dollarization therefore serves as a strategic lever to assert this new worldview.
Conclusion: A step towards a new era of international trade In the face of these movements, the Shanghai Cooperation Organization is positioning itself as a central player in de-dollarization, offering members a robust alternative to traditional systems dominated by the United States. The SCO, like the BRICS, seeks to challenge the established economic order, emphasizing values of cooperation and autonomy. This marks the beginning of an era in which we could witness the emergence of a bifurcated system, where the US dollar could quickly lose its leading position in international trade to a set of currencies less dependent on external influences.https://www.youtube.com/watch?v=VSxM6q_JjyU
