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UPDATED: November 16, 2011 NO. 46 NOVEMBER 17, 2011
Beyond Europe
Facing the EU debt crisis, the SCO pushes for regional financial security

ANNUAL REUNION: Leaders pose at the 10th SCO prime ministers' meeting in St. Petersburg on November 7 (MA ZHANCHENG)

Chinese Premier Wen Jiabao's proposals at a recent meeting of the Shanghai Cooperation Organization (SCO) presented China's thoughts on the organization's development in the next decade, said Chinese analysts.

Proposals Wen put forward at the annual SCO prime ministers' meeting in St. Petersburg, Russia on November 7 included free movement of goods, capital, technology and services between member states, an SCO "seed bank" for agricultural cooperation and joint epidemic prevention.

These practical suggestions, which were based on the current conditions of the 10-year-old organization, addressed its challenges and charted the direction of its future development, said Wang Lijiu, a research fellow with the China Institutes of Contemporary International Relations (CICIR).

Financial alliance

While stressing in-depth financial cooperation, especially currency swaps and settlement cooperation, Wen called on the finance ministers and central bank governors of SCO member states to coordinate on a regular basis. China is willing to host the Second SCO Finance Ministers and Central Bank Governors Meeting in 2012.

SCO members should continue to expand currency swaps and settlement cooperation, increase financing support to regional economic cooperation projects and establish a "multi-level and multi-channel financing cooperation system," Wen said.

In addition, Wen reiterated his proposal of establishing an SCO development bank. He said he hoped other member states can attach importance to this proposal, so as to promote the development of a regional financing system. Wen first raised this idea at the SCO prime ministers' meeting in Dushanbe, Tajikistan, last year.

In St. Petersburg, Wen urged the SCO to establish an expert panel as soon as possible to study the feasibility of an SCO development bank.

"If the SCO sets up a development bank, it will create huge advantages, especially in mitigating the negative impact caused by the depreciation of the U.S. dollar," said Ji Zhiye, Vice President of the CICIR.

China's proposal on promoting SCO financial cooperation has been well received by other member states. Both the communiqué and the joint statement issued at the SCO prime ministers' meeting in St. Petersburg expressed support for the establishment of an SCO special account and an SCO development bank.

During the meeting, the prime ministers also signed the mid-term development strategy for SCO inter-bank union (2012-16).

In the past, large-scale investments were mainly made on the platforms of the Asian Development Bank and the IMF. The proposed SCO special bank account will greatly facilitate investment and trade among SCO members, said Li Lifan, a research fellow with the Shanghai Academy of Social Sciences.

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