Tianjin Declaration Released: SCO Advances “Local Currency Settlement Roadmap + Development Bank” Dual Engines

2025-09-03 09:20:00 · UDF Organizned

On September 1, 2025, the heads of state of Shanghai Cooperation Organization (SCO) member countries held a Council of Heads of State meeting in Tianjin, China, and issued a declaration.

In the Tianjin Declaration, it was emphasized:

Member states highlighted the important role of financial cooperation in promoting economic growth in the SCO region. It is very important for relevant member states to continue implementing the “Roadmap for Expanding the Share of Local Currency Settlement among SCO Member States” (September 16, 2022, Samarkand).

The relevant member states reiterated the importance of establishing an SCO Development Bank, decided to set up the bank, and accelerate consultations on a series of issues concerning the operation of this financial institution.

Implementing the “Roadmap for Expanding the Share of Local Currency Settlement among SCO Member States” has multiple important impacts on cross-border settlement, which is particularly significant in the current context where the U.S. dollar dominates settlement.

Reduce Dependence on the U.S. Dollar

Using local currency settlement can avoid risks arising from U.S. dollar exchange rate fluctuations and lower foreign exchange costs for enterprises in cross-border trade.
Reducing dependence on the U.S. dollar enhances the independence and autonomy of SCO member states in the international economy.

Improve Settlement Efficiency

Local currency settlement reduces currency conversion steps, simplifies cross-border settlement procedures, and improves the efficiency of fund utilization.
Funds can circulate more quickly among member states, speeding up corporate cash turnover and promoting trade and investment activities.

Promote Trade and Investment

Local currency settlement reduces fees and exchange rate spreads caused by currency conversion, thereby lowering transaction costs for enterprises.
By reducing trade costs and risks, it encourages enterprises to increase cross-border trade volume and promotes trade growth within the SCO region.
It also provides a more convenient financial environment for investment cooperation among member states, helping attract more cross-border investment.

Strengthen Regional Financial Cooperation

Strengthening financial ties and cooperation among member states promotes regional financial integration.
It also helps build a clearing system within the SCO, improving regional financial stability.

Enhance the Internationalization of the Renminbi

By promoting RMB settlement among SCO member states, the scope of RMB use in international payments can be expanded.
This raises the status of the RMB in the international monetary system and advances the process of RMB internationalization.

Address Financial Risks

Establishing an independent regional payment system reduces reliance on international payment systems such as SWIFT, thereby lowering external sanction risks.
Through local currency settlement and regional financial cooperation, SCO member states can strengthen their ability to respond to international financial volatility.

Settlement

Tianjin

SCO

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