Pushing for de-dollarisation

Pakistan put forward a pertinent proposal concerning developing economies by calling for the use of national currencies in mutual settlements. It also voiced the need to establish mechanisms, such as development banks, to offset global financial shocks. Speaking at the SCO Council of Heads of Government meeting in Dushanbe yesterday, Deputy Prime Minister and Foreign Minister Ishaq Dar pushed the envelope further on a resolve previously attained by the 10-member bloc in Islamabad in 2024. He stressed the need for a roadmap to gradually increase the share of national currencies in trade, moving away from the monopoly of the US dollar. The proposed establishment of an SCO Fund and new investment avenues are direct extensions of this strategy.

Establishing a parallel global economy has been a longstanding goal for developing nations, particularly those facing US sanctions. As targets of Western restrictions that stifle growth and block international market access, Russia and Iran are leading this push. To reduce reliance on the greenback and alleviate debt burdens, these nations have proposed trading through a basket of mutually acceptable local currencies. While BRICS remains central to this effort, its recent New Delhi summit stopped short of proposing a common currency, focusing instead on interoperable payment systems and national-currency trade.

Pakistan's stated intention is to promote and protect the WTO's multilateral trading system to ensure inclusive global growth. The Global South has long criticised the protectionist policies and unilateral coercive measures of Western nations which have left the world with a deeply lopsided developmental landscape. These nations argue with good reason that the US dollar's monopoly, established primarily after the 1973 Middle East oil crisis, violates the spirit of international law by exacerbating inequality and suppressing growth. Incorporating currencies like the yuan, ruble, yen and rupee into international trade settlements is indispensable to erecting a new financial architecture built for equitable global development.