BEIJING, July 6 (APP):China has proposed to expand cooperation on sovereign digital currency among member countries of the Shanghai Cooperation Organization (SCO). Experts have said that the proposal will elevate the transaction efficiency among SCO members.

In addition to the expanded cooperation on using sovereign digital currencies, the Chinese side also suggested the SCO to scale up local currency settlement between SCO members and promote the establishment of an SCO development bank.

The trade among SCO members can be expanded with higher efficiency through the increasing adoption of sovereign digital currency as enterprises can lower potential risks resulting from geopolitical factors and the fluctuation in the US dollar exchange rate, Wang Peng, a research fellow at the Beijing Academy of Social Sciences, told the Global Times.

As a major SCO member, China has been implementing targeted efforts to boost the use of yuan in cross-border settlement.

In January 2023, a cross-border trade center was established at China-SCO Local Economic and Trade Cooperation Demonstration Area (SCODA) in Qingdao, East China’s Shandong Province, where enterprises can choose to settle their international trade with SCO members in the yuan.

Lu Wei, a representative from SCODA, said in a statement sent to the Global Times that the trade center can effectively reduce companies’ settlement cost while avoiding the risks incurred by frequent exchange rates turbulences.

By the end of June, the trade center of SCODA has facilitated 24.29 billion yuan ($3.35 billion) worth of cross-border settlement. The center processed 3.84 billion yuan in cross-border financing using the yuan, with 1.25 billion yuan coming from overseas markets, according to SCODA.

SCODA also revealed that demonstration area will set an innovation lab targeting China’s Cross-Border Interbank Payment System, aiming to expand the utility of the system among SCO members and the China-proposed Belt and Road Initiative while promote yuan internationalization.

Chinese enterprises are keen to pursue closer cooperation with their overseas business partners to promote use of digital yuan, Wang said, adding that the cooperation potential will also boost the opportunities for Chinese enterprises to expand overseas business. Wang noted that strengthened cooperation among SCO members will provide a platform for China to share its advanced technologies with more global partners.

The Chinese yuan has a huge potential in its continuous internationalization amid the shift in the international monetary system to a multi-currency system as the yuan has achieved breakthroughs in international payments, global reserves, and cross-border settlements, according to a report by China Securities.

As China is set to continue digital currency development following the proposal, the launch of the multiple central bank digital currency bridge project could be further accelerated – a project designated to explore the application of central bank digital currencies in cross-border payments which will also drive up the potential demand for renovating the banking information system, according to a report from Tianfeng Securities.

Yiwu, a hub of small goods in East China’s Zhejiang Province with around 2.1 million enterprises connected to more than 230 countries and regions, launched 10 pilot measures targeting the use of digital yuan in March with a special focus to explore cross-border settlement with high-quality payment services.

BEIJING, July 6 (APP):Iran’s integration into the Shanghai Cooperation Organization (SCO) will open up new opportunities for its exchanges with the outside world and regional stability, analysts say.

Mehran Kamrava, professor of government at Georgetown University in Qatar, told China Daily that Iran’s entry into the SCO is an important development in several respects.

He said the membership was in line with Iran’s Look East policy, wherein Tehran has focused on relations with non-Western states in the areas of diplomacy, commerce, and security cooperation.

Further, he said it also increases the possibilities for Iran to better interact and trade with countries that are willing to engage with it.

Iran’s full membership was approved at the 23rd meeting of the Council of Heads of State of the SCO held via video conference on Tuesday, ending an almost two-year process that began at the 21st SCO meeting in Dushanbe, Tajikistan, in 2021.

The SCO member states include China, India, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan, Uzbekistan, and now Iran.

Kamrava said that Iran sees itself as an important catalyst in fostering a global arrangement. For Teheran, this alternative is anchored in the BRICS, especially in China and Russia, and now in the Shanghai Cooperation Organization.

BRICS, founded as BRIC in June 2009, is an acronym for the developing nations of Brazil, Russia, India, China, and South Africa — which officially became a member in 2011.

In his speech at the SCO virtual summit, Iranian President Ebrahim Raisi said his country believes the SCO has a privileged position in promoting the development of political, security and economic cooperation.

Certainly, the benefits of the official membership of the Islamic Republic of Iran in the Shanghai Cooperation Organization will remain in history, he said.

Arhama Siddiqa, a Middle East analyst and research fellow at the Institute of Strategic Studies Islamabad in Pakistan, told China Daily that it is worth noting that in 2021, China and Iran signed a 25-year cooperation deal, specifically in areas such as oil, which officially brought Iran into the Belt and Road Initiative or BRI.

She said this was an important step in the overall regional development puzzle and that it was also interesting to see the Chinese-brokered Iran-Saudi rapprochement earlier this year, which has helped Iran gradually emerge from diplomatic isolation.

Iran’s integration into the SCO is significant as it demonstrates the organization’s commitment to fostering collaboration among diverse nations and striving for a better future, Siddiqa said.