The Shanghai Cooperation Organization (SCO) is working on a system that would allow its members to conduct transactions using their own national currencies.  SCO Deputy Secretary-General Janesh Kain confirmed this to Izvestia, stating that the initiative is a top priority for the organization.

"SCO countries are eager to use their national currencies for trade and investment," said Kain.  "This topic has been under discussion at various levels for some time."

He acknowledged that creating such a system presents some legal hurdles, given the need to implement it across ten diverse countries, each with its own unique regulations. However, Kain expressed confidence that the SCO will overcome these challenges and achieve its goal.

This push towards national currency settlements comes as Russian President Vladimir Putin announced that transactions between Russia and other SCO states using national currencies exceeded 92% in the first four months of 2024.

Recall, Iran’s Acting President Mohammad Mokhber, speaking at the SCO summit in Astana on July 4, offered that introduction of single the currency of Shanghai Cooperation Organization (SCO) based on groundbreaking technologies should be seriously discussed.

“Beefing up the economic cooperation between member states may become one of the major steps aimed at strengthening the SCO’s role globally and in the region.  This includes expansion of the use of national currencies or [the creation] of common currency based on groundbreaking technologies, which is of the utmost interest and a serious cause for discussion,” Mr. Mokhber said, according to Iran’s Mehr News Agency (MNA).

SCO Secretary-General Zhang Ming said at a media briefing in Beijing on May 10, 2023 that the central banks and finance ministries of Shanghai Cooperation Organization (SCO) member nations have begun drawing up a roadmap to use national currencies in mutual settlement.

Zhang also noted that they are discussing setting up an SCO development bank.

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

In September 2022, leaders of the SCO agreed to increase the use of national currencies in mutual settlement, according to the Samarkand Declaration.

It is to be noted that the draft roadmap of the SCO member nations on increasing the share of national currencies in mutual settlements was developed at the initiative of Kazakhstan (the SCO Summit in June 2018 in Qingdao).

The draft roadmap provides for creation of the required conditions for the functioning of the system of settlements in the national currencies of the SCO member nations, contributing to the development of the national financial markets of the SCO countries, increasing liquidity in national currencies, developing interbank cooperation, and creating tools for hedging currency risks as part of a two-stage process (in the period of 2022-2023 and 2024-2025), as well as measures to stimulate settlements in national currencies (2022-2025).

The draft roadmap provides for flexible provisions and reflects the readiness of countries to create appropriate conditions and develop a settlement and clearing mechanism to increase the share of national currencies in a multilateral manner in the SCO space, which does not imply the emergence of legal and other obligations of the parties.

As of April 1, 2022, six expert meetings were reportedly held on the development of mutual settlements in the national currencies of the SCO member states.  The meetings were attended by the representatives of national (central) banks, finance and foreign ministers of the member nations, as well as the SCO Interbank Consortium.

Established by Russia and China in 2001, the Shanghai Cooperation Organization is a Eurasian political, economic, international security and defense organization.  It is the world's largest regional organization in terms of geographic scope and population, covering approximately 80% of the area of Eurasia and 40% of the world population.  Its combined GDP based on PPP was around 32% of the world's total.

Initially the organization included Russia, Kazakhstan, Kyrgyzstan, China, Tajikistan, and Uzbekistan, while in 2017 they were joined by India and Pakistan.  Iran became a full-fledged member of the SCO on July 4, 2023, and Belarus became a full-fledged member of the Organization on July 4, 2024.  

Thus, the SCO now has ten full members – Belarus, China, Iran, Kyrgyzstan, Pakistan, Russia, Tajikistan, India, Kazakhstan and Uzbekistan.

Mongolia is an observer state.

SCO’s dialogue partners include Armenia, Azerbaijan, Bahrain, Cambodia, Egypt, Kuwait, Maldives, Myanmar, Nepal, Qatar, Saudi Arabia, Sri Lanka, Turkiye and United Arab Emirates.

ACEAN, CIS, Turkmenistan and the United Nations are guest attendances.

Inactive: Afghanistan.