The global financial landscape is experiencing a significant shift as the Shanghai Cooperation Organization (SCO) takes steps to reduce the dominance of the U.S. dollar in cross-border transactions. This move towards de-dollarization is gaining momentum as more countries within the SCO are aligning to use national currencies for settlements rather than the dollar.

The SCO, a Eurasian political, economic, and security alliance comprising eight member states including China, Russia, India, and Pakistan, is increasingly looking to reduce its reliance on the U.S. dollar in its financial transactions. This coordinated effort marks a significant challenge to the traditional dominance of the dollar in global trade and finance.

The trend towards de-dollarization has been growing in recent years, with countries seeking alternatives to the dollar to reduce exposure to potential economic and geopolitical risks associated with its use. By using national currencies for cross-border settlements, countries can potentially lower transaction costs, reduce currency exchange risks, and assert more control over their own financial systems.

The SCO's push for de-dollarization reflects a broader global movement towards diversifying currency reserves and reducing dependence on the dollar. This shift is driven by concerns over the stability of the U.S. economy, the impact of U.S. monetary policy on global markets, and the potential for sanctions and trade restrictions imposed by the U.S. government.

China and Russia, two of the largest economies within the SCO, have been leading efforts to promote the use of their own currencies, the yuan and the ruble, in international trade and finance. By increasing the use of their national currencies in cross-border transactions, these countries aim to strengthen their economic ties with other SCO members and reduce their vulnerability to external economic pressures.

The move towards de-dollarization within the SCO is likely to have far-reaching implications for the global financial system. As more countries shift away from the dollar, the role of the U.S. currency as the world's primary reserve currency could be challenged, potentially leading to a more multipolar monetary system with a greater diversity of currencies in use.

In conclusion, the SCO's coordinated effort to reduce reliance on the U.S. dollar in cross-border settlements is a significant development that reflects broader trends towards de-dollarization in the global economy. As countries within the SCO and beyond seek to diversify their currency reserves and assert more control over their financial systems, the traditional dominance of the dollar in international trade and finance may face increasing challenges in the years to come.

Source: https://news.bitcoin.com/de-dollarization-deepens-as-sco-nations-target-dollar-free-trade/