28 Mar 2024
Wednesday 17 December 2014 - 10:05
Story Code : 137299

Payments in national currencies within SCO could curb speculator activity

Payments in national currencies within SCO could curb speculator activity
Deputy Director General of the Center for Political Information claims that transition to payments in national currencies within the framework of the Shanghai Cooperation Organization may reduce speculator pressure on member states' stock exchanges.


MOSCOW, December 16 (Sputnik) A transition topayments innational currencies withinthe framework ofthe Shanghai Cooperation Organization (SCO) may reduce speculator pressure onmember states' stock exchanges, the Deputy Director General ofthe Center forPolitical Information told Sputnik News Agency, Tuesday.

"The problem is that the participants ofthe foreign economic activity are used toacquiring additional profits fromthe possibility ofhaving a lot ofcurrency. This particularly concerns exporters who got used toreceive dollars and euros and, depending onthe economic situation, toinvest ineconomy, or, more often, toplace free money indeposits and speculate oncurrency exchanges," Alexey Panin said.

The economy ofKazakhstan has recently suffered froman exchange crisis, similar tothe one that Russia faces now.

"In terms ofcurrency Russia and Kazakhstan are more ofthe developing countries, rather thanthe developed ones. Their currency is linked tothe commodity market. Due tostrengthening ofdollar, both [Russian] ruble and [Kazakh] tenge show similar [negative] dynamics," Panin said.

Panin is sure that a transition topayments innational currencies betweenSCO countries will enable member states toreduce speculative pressure. Kazakhstan is worried byexternal influence onits national currency and is interested instabilizing the currency tominimize potential risks fromspeculators.

On December 15, the Prime Minister ofKazakhstan Karim Massimov called onSCO countries touse national currencies formutual payments.

"We already have an experience onthe bilateral level, which could shift tothe whole organization," Massimov said duringthe SCO meeting.

"Today, effective use ofthe existing resources is essential forminimization ofconsequences ofglobal economic shocks," he added.

During the same meeting, Russian Prime Minister Dmitry Medvedev said that a joint bank could be established onthe same basis asthe Eurasian Development Bank that currently operates inthe region.

At the moment, single payments betweenSCO countries innational currencies are conducted in "test mode," the Executive Secretary ofthe SCO Business Council Sergey Kanavsky told Sputnik.

"Russia, China and Kazakhstan are involved inthose payments more often. Uzbekistan, Kyrgyzstan and Tajikistan are also trying tolink, butthey still get accustomed," he said.

First initiatives withregard topayments innational currencies withinthe framework ofthe SCO were taken back in2002. Several specific proposals tocarry outsuch payments have sincebeen made byfinancial and banking associations, aswell asby business structures, Kakaevsky said, adding that such transition could be easily implemented if sufficient political will exists.

The SCO is a Eurasian political, economic and military alliance founded in2001 inShanghai bythe leaders ofChina, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. India, Iran and Pakistan, aswell asMongolia and Afghanistan have observer country status inthe organization, while Belarus, Turkey and Sri Lanka are considered tobe dialogue partners.

By Sputnik News

 

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