Financial cooperation within the Shanghai Cooperation Organization should be boosted to match the economic growth of its member countries, analysts said.
"Financial cooperation among the members has still to take off," said Guo Tianyong, director of the Central University of Finance and Economics' China banking research center.
Established in Shanghai in 2001, the organization's member states are China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Pakistan, Afghanistan, Iran, and Mongolia have been given observer status.
Vice-Foreign Minister Cheng Guoping said earlier that the organization has achieved significant economic cooperation and the potential rewards for this type of approach in the financial sector are obvious.
Organization members have already established two non-governmental organizations - the Business Council and the Interbank Association - to strengthen cooperation in the financial sector.
China has proposed a number of measures to achieve this goal, including researching the establishment of a development bank in the organization, allowing national currencies a higher international profile and getting banks in member states to adopt a more unified approach.
The Shanghai Cooperation Organization has targeted 2020 as the most important year for the free flow of goods, services, technology and capital among members.
The organization is making progress on setting up special accounts for each member state's currencies. This will help ease the way for trade, said Chen Yurong, a researcher at the China Institute of International Studies. But governments also need to set up clearly defined regulations for projects and cooperate on large financial projects, he said.
Guo, from the research center, recommended the establishment of a fund to finance large projects and coordinate capital flow.
The use of national currencies should be enhanced to lessen reliance on foreign financing in cross-border transactions, he said.
Ma Delun, deputy governor of the People's Bank of China, said in September that Eurasian countries, including organization members, should work together to help reform the international monetary system and further promote their currencies.
"We could reduce our reliance on major world currencies and fend off currency risks," he said. "The current complicated global financial situation makes it even more necessary to deepen financial cooperation between China and Eurasia."
This approach will reduce the dollar reliance, said Chen Daofu, policy research chief of the Financial Research Institute at the State Council's Development Research Center.
China and Russia have both called for less dependence on the US dollar in international trade since the global financial crisis, and for accelerated steps to promote their own currencies.
In December 2010, the yuan was traded abroad directly for the first time on Moscow's Micex exchange. In addition, China has been developing currency swaps with other organization members. In 2011, China signed swap agreements worth 700 million yuan ($109 million) with Uzbekistan and 7 billion yuan with Kazakhstan.
The Xinjiang Uygur autonomous region could play a pivotal role by connecting these countries with China through financial cooperation, Ma said.
By the end of July, China conducted cross-border trade settlements valued at 1.63 trillion yuan, toward which Xinjiang contributed 18.9 billion yuan, according to the People's Bank of China. Xinjiang is also a pilot region that allows foreign investors to invest directly using the yuan.
Xinjiang has the potential to develop into a central Asian financial center, said Sun Yongfu, director general of the European Affairs Department at the Ministry of Commerce.
Source: China Daily
