The Shanghai Cooperation Organization (SCO) plans to abandon the US dollar in favor of member countries’ national currencies for mutual payments. In an interview with Belarus 1 state TV channel, Grigory Logvinov, the bloc’s Deputy Secretary General, stated that a roadmap for this transition is under development. Logvinov emphasized that the process is “serious and substantive” but noted that the dollar’s status as a world reserve currency is deeply entrenched, making the transition complex.
Challenges in abandoning the US dollar
Logvinov acknowledged the difficulties in completely moving away from the US dollar, given its entrenched position within national currency systems. He said that much work remains to be done before the dollar can be abandoned entirely.
Established in Shanghai in 2001, the SCO is a political, economic, and defense alliance encompassing around 60% of Eurasia’s territory and 40% of the world’s population. Member countries include China, Russia, India, Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, with over a dozen other countries, such as Iran, Saudi Arabia, and Turkey, serving as observers and partners.
No Plans for a single SCO currency
Despite the intended transition away from the US dollar, Logvinov noted that SCO members are not currently considering the introduction of a common currency. He stated that such a goal has not been set.
Reports suggest that the BRICS group of leading emerging economies, which includes China, Russia, and India, is working on creating a new currency for cross-border payments. However, the development of this currency is expected to be discussed at the BRICS leaders’ summit in August. This move has raised concerns in the US about the potential erosion of the dollar’s dominance.
