Military Review

Impact on the dollar: the SCO countries decided to pay mainly in national currencies

Impact on the dollar: the SCO countries decided to pay mainly in national currencies

The summit of the Shanghai Cooperation Organization (SCO), held in Samarkand (Uzbekistan), to a certain extent can be considered a landmark for further weakening of the US financial hegemony. One of the main decisions that was made at this event was the expansion of trade in the national currencies of the member states of the organization.

What is the reason for this decision? First of all, the SCO member states want to free themselves from the hegemony of the US dollar. The anti-Russian sanctions imposed by the West have demonstrated to the whole world that many countries are not able to feel calm, being dependent on the dollar and the euro. Both China and Turkey, and even the Arab monarchies of the Persian Gulf, drew appropriate conclusions from the experience of anti-Russian sanctions.

For Russia, switching to trading primarily in national currencies helps to cushion the blow from US and European sanctions. China, whose relationship with the US is also rapidly deteriorating, is guided by the same considerations. Iran itself has been under sanctions for many decades; for it, such a development of events is even more beneficial. Finally, India, despite the developed cooperation with the US and the UK, also decided to switch to trade with Russia in national currencies.

An increase in settlements in national currencies, according to the leaders of the SCO countries and candidates for membership in the SCO, will help accelerate the economic development of states. The creation of the SCO Development Bank and the development of cross-border payment systems will lead to a further increase in the financial independence of states.

Chinese President Xi Jinping has so far avoided openly saying that dependence on the US dollar is fraught with numerous political risks. But in reality, Beijing is very concerned about the potential risks associated with dependence on the US dollar. The withdrawal of the yuan to the level of the international currency is still very far away. But it is already quite capable of becoming a regional currency.

Now Beijing's initiatives to de-dollarize settlements in transnational trade are supported by Chinese financial institutions, including at the regional level. This is not the first year this has happened. So, back in 2015, the initiative of Sberbank of Russia and the Bank of Harbin was announced to form a non-profit organization for financial cooperation. This move was made to facilitate Russian-Chinese trade and financial cooperation.

Interestingly, small Chinese financial institutions, which are less dependent on the dollar, will play an important role in de-dollarization. They may well turn into platforms on the basis of which alternative settlements will be carried out, that is, settlements in national currencies. Such banks are not afraid of sanctions imposed by the West. For example, in May 2022, the Bank of Harbin presented the “One Hundred Measures” document aimed at developing further financial ties with the Russian Federation in the face of sanctions.

Chinese banks may well help Russia by supplying yuan in cash to the country. With the help of payments in yuan, Moscow avoids the negative consequences of Western sanctions. On the part of China, of course, this is not so much a manifestation of friendly feelings as mutually beneficial cooperation. Xi Jinping is well aware that sanctions against his country will only get tougher, regardless of what position Beijing would take regarding the Ukrainian events.

Most likely, Turkey is also preparing for a similar development of events. Although Turkey is a member of NATO, the attitude of the West towards President Recep Tayyip Erdogan is well known. And he understands that if he succeeds in "pushing through" Russia, then Turkey will inevitably be among the next. This is probably why he called joining the SCO the goal of Ankara.

Thus, the SCO is becoming a genuine alternative to the West, and, first of all, it is in economic and financial terms. It can be predicted that over time this association will consolidate almost most of the developing economies of Asia, and in the future it can be expanded beyond the Eurasian borders. For example, there is already information that Egypt is very interested in joining the SCO.

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  1. Uprun
    Uprun 23 September 2022 12: 42
    Let's turn euros and dollars into colored candy wrappers, let those who have a lot of them cry....
    1. Vend
      Vend 23 September 2022 12: 46
      This is good news, it's a pity you can't do it in just one day.
      1. yuriy55
        yuriy55 23 September 2022 12: 52
        Quote: Wend
        This is good news, it's a pity you can't do it in just one day.

        Down and Out trouble started.
      2. Pereira
        Pereira 23 September 2022 13: 11
        In parallel, the news is being discussed - Banks of Uzbekistan have suspended the service of MIR cards
        1. Vladimir61
          Vladimir61 23 September 2022 13: 22
          Quote: Pereira
          In parallel, the news is being discussed - Banks of Uzbekistan have suspended the service of MIR cards
          This is unpleasant and even offensive to us, but they will fall under sanctions in international settlements with the West, and then goodbye to our "parallel" export-import.
          1. bayard
            bayard 23 September 2022 15: 22
            Quote: Vladimir61
            and then farewell to our "parallel" export-import.

            I think that they think least of all about our parallel imports, but about the damage to their economy - in the first place.
            I think this refusal is temporary, because the SCO countries have agreed to switch to their own currencies in mutual trade. Perhaps a new international settlement system will be created, and / or temporarily payments will be made through the Chinese one. All participating countries still need to withdraw their reserves from the United States, and this takes time and considerable effort.
            1. Got it
              Got it 23 September 2022 16: 44
              Oh sure! But nevertheless, it is through Kazakhstan that our company buys what European firms do not sell in the Russian Federation.
              1. bayard
                bayard 24 September 2022 00: 13
                Ivan , do not burn down the office , the enemy does not sleep .
                In addition, such deliveries are usually carried out through trusted companies.
    2. Monster_Fat
      Monster_Fat 23 September 2022 13: 05
      The yuan has a feature that must be taken into account: the yuan is not a hard currency, and its use in any calculations requires permission from the State Bank of China.
      1. KCA
        KCA 23 September 2022 14: 01
        So our trade with China will increase, there is nowhere to go, the yuan itself is not needed, no one has canceled barter, it’s just that the price of transactions will be calculated by the ruble / yuan, and not the ruble / dollar, or dollar / yuan
      2. Sanichsan
        Sanichsan 23 September 2022 17: 05
        Quote: Monster_Fat
        The yuan is not hard currency and its use in any calculations requires permission from the State Bank of China.

        Bravo! good and the dollar also turns out to be not hard currency ... belay From now on, there are some problems with settlements in dollars. wink
      3. -TROMB-
        -TROMB- 24 September 2022 09: 55
        I agree ... I can also add - the yuan fell against the dollar by 8 percent. .. the permission you mentioned ... the established yuan corridor ... make it impossible to keep reserves in yuan ..
    3. Maz
      Maz 23 September 2022 13: 40
      ❗️The dollar on the stock exchange is below 58 rubles for the first time since August 19.
      Euro - 56 rubles for the first time since July 21, and yet the effect of the totality of events in favor of Russia. And the market reacts sensitively and instantly. The ruble is growing!!! And our cause is right!
  2. iouris
    iouris 23 September 2022 12: 57
    The dollar itself "hit". It so happened... No one is to blame. It itself.
    The monetary world is moving into a different reality. And the rest ... Not everyone will be there.
    "Grandfather, will there be money under communism?
    - They will. However, not all."
  3. kind
    kind 23 September 2022 12: 58
    Deal? About what? Kazakhstan and Uzbekistan stopped settlements on the Mir system. Will we drive cash back and forth???
    1. SKVichyakow
      SKVichyakow 23 September 2022 13: 16
      Quote: Good
      Deal? About what? Kazakhstan and Uzbekistan stopped settlements on the Mir system. Will we drive cash back and forth???

      The Turks also stopped.
      1. Andrey A
        Andrey A 23 September 2022 19: 49
        The Turks suspended the service of the Mir card, only some banks, and not the whole country at all, apparently, this is also happening in Uzbekistan and Kyrgyzstan ... There are many banks, not everyone wants to work with the Mir card, this is right ...
  4. AdAstra
    AdAstra 23 September 2022 12: 58
    You can downvote, but I have a question, is this blow already fatal or not a little bit yet, otherwise even in my lifetime there are such headlines, but he is such a dog that he keeps holding on and holding on?
    1. Uprun
      Uprun 23 September 2022 13: 01
      Not fatal, so in the crotch of a lightfoot on the left ....
    2. Pereira
      Pereira 23 September 2022 13: 12
      Such messages should be treated as Peskov's speeches. Verbal diarrhea.
    3. dzvero
      dzvero 23 September 2022 13: 20
      is this blow already fatal or not a little bit yet

      Hit while the third in the chain. The process of shifting the dollar has already begun. Why do I think so? Here:
      What is the Fed and the dollar? Imagine MMM as a central bank with a single dealer - the US Treasury. A dollar is a ticket issued by the Treasury at the expense of MMM. The whole world is acting as a sucker. The system can work successfully only if in the world 1) the US market is the most attractive and 2) there are no other independent financial centers.
      And now such a center that is not subject to the United States appears. The challenge is very serious and I think that the US will go, if not "all-in", then almost. Time is working against them.
  5. tralflot1832
    tralflot1832 23 September 2022 12: 59
    It is necessary to break this swing. On what do the USA and the West hold on. A strong dollar is a weak euro. A weak dollar is a strong euro, and so on ad infinitum.
  6. Vladimir Vladimirovich Vorontsov
    Vladimir Vladimirovich Vorontsov 23 September 2022 12: 59
    "The SCO countries have decided to settle accounts with national currencies" -

    - "Don't go crazy!"...

  7. Alexandr2637
    Alexandr2637 23 September 2022 13: 02
    Let the stoves melt with candy wrappers in winter!
  8. Two
    Two 23 September 2022 13: 05
    hi The main thing here is not to rush from one extreme to another! China is also a situational friend! We need to develop...
  9. AdAstra
    AdAstra 23 September 2022 13: 06
    And the next news is that Uzbeks have suspended the service of Mir cards laughing
    1. KCA
      KCA 23 September 2022 14: 06
      Well, now their gasters will feed all sorts of money transfer offices, or carry cash, delighting fellow countrymen who meet them from the train, who don’t want to work at all, with free money
    2. sheet
      sheet 23 September 2022 14: 10
      Quote from AdAstra
      And the next news is that Uzbeks have suspended the service of Mir cards laughing

      Do the SCO countries use Mir cards to pay each other? fool
  10. zorch
    zorch 23 September 2022 13: 08
    If the dollar is excluded from mutual settlements between countries, then no one will need the dollar, the high price of the dollar is provided by American military lawlessness
  11. rocket757
    rocket757 23 September 2022 13: 17
    further weakening of US financial hegemony.
    . And Baba Yaga is against ... only time will tell who wins.
  12. NightmareIvanych
    NightmareIvanych 23 September 2022 13: 31
    "Mostly" is how much? 20/40/50/70/90 percent? Such a vague concept ... But yes, the idea is good, for good all these "body movements" should have been started after the "Munich speech", in the worst case, after the war on 08.08.08/XNUMX/XNUMX - this was the first bell ... for the most deaf. ...
  13. Arkady007
    Arkady007 23 September 2022 14: 26
    The best news of the last days.
  14. navigator777
    navigator777 23 September 2022 14: 46
    Soon they will begin to impose sanctions for not paying with dollars
  15. Don Analyst
    Don Analyst 23 September 2022 17: 11
    And at this very time, the President of Kazakhstan, Tokayev, is in New York.
    He holds meetings with American bankers, heads of American firms, calls for American investments in all spheres of life.
    1. The comment was deleted.
  16. Pavel57
    Pavel57 25 September 2022 12: 40
    The indicator of US strength - countries began to run away from the dollar.