Member states of the Shanghai Cooperation Organisation (SCO) might be able to resolve some of their sanction-induced problems by using a common currency, Iranian expert on Iran-Russia relations and Head of the Islamic Republic's Institute for Strategic Researchers in the Contemporary World Shuaib Bahman has stated.
The idea to introduce a new currency that could be used in settlements and exchanges between Shanghai Pact members was proposed by Iran's Foreign Deputy Minister for Economic Diplomacy Mehdi Safari in a letter to SCO members. Bahman suggested that this currency could help the SCO’s biggest economies, China and Russia, resolve issues such as limited access to financial resources.
"Nowadays we see that many Russian banks that were slapped by the US sanctions are having difficulty accessing their own foreign currency reserves. Therefore, Iran's proposal to create a single currency within the framework of the SCO could be a real help to all member countries of the organisation in overcoming their issues with having access to foreign currency", the expert explained.
However, introducing a single currency is not easy and would require Shanghai Pact members to take additional steps. As the expert pointed out, SCO member states would have to harmonise their economies in terms of regulations and build a common economic space before a single currency may be issued. He added that the experience of the European Single Market could serve as a good model.
Bahman also claimed that the proposal would bring integration on a political level, noting that international blocs and alliances rarely focus on a singular function, often prompting their members to cooperate in different spheres, such as political, economic, military, security and cultural policies. Such cooperation would foster the consolidation of the member states, the expert added.
So far, Iran's proposal remains unanswered by the remaining SCO members. Apart from Iran, which initiated the on-going procedure to join the SCO last September, the bloc includes China, Russia, India, Uzbekistan, Kyrgyzstan, Tajikistan, Pakistan, and Kazakhstan. SCO members account for nearly 40% of the world’s population and 30% of global gross domestic product.
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