'Bangladesh can settle only 10% of its trade with China and India with local currency'

The Shanghai Cooperation Organisation comprises three big economies: China, Russia and India, along with comparatively smaller ones like Pakistan, Iran and four central Asian countries. 

Combined, the SCO member states make up an $85 trillion economy, almost equal to that of the United States.

The important issue that needs to be considered is the volume of bilateral trade these three big economies have among themselves. 

China and Russia maintain a significant amount of bilateral trade, which is relatively good. Russia exports petroleum products, industrial raw materials and military equipment to China. On the other hand, China has a big market for almost every one of its commodities in Russia.

The trade volume between China and India is also significant, although there is a big trade deficit in favour of China. 

Overall, the market size of the countries under SCO is big. And the volume of trade is respectable. 

If these states start exchanging national currencies in mutual settlement, they will reduce dependency on the US dollar for sure. 

If there is regular bilateral trade among the SCO members and if there are export earnings using local currencies, some portion of the trade can be done through settlement accounts, and the rest would be with the US dollar and other Western currencies. 

Bangladesh has large volumes of trade with China and India, no doubt. But Bangladesh's exports to these three SCO countries are not as big. If Bangladesh joins SCO, I do not see any extraordinary benefit that will come from it.

Bangladesh imports products worth $16 billion from China and $14 billion from India while Bangladesh's export to China amounts to $1 billion and $2 billion to India. 

If Bangladesh joins SCO or a similar bloc, it could settle payments in national currencies only equivalent to $3 billion, while the rest would have to be paid in the US dollar. That means, Bangladesh can settle only 10% of its trade with China and India with local currency. 

The Bangladesh government has made the Chinese Yuan a convertible currency. But the banks are not interested in opening settlement accounts with the Yuan. 

The government should motivate the banks to use Yuan. However, there is no need to make it binding for all the banks to do so. A few good performing banks can facilitate mutual settlements with local currencies. 

The banks are not interested because the volume of Bangladesh's export to China is not very big. Given the low volume of transactions [during export], the government can instruct one or two banks to handle this. 

Bangladesh's small export market size is a big problem. That is why most of the traders use the US dollar instead of local currencies.

The government should first widen its market in China. The more the export volume, the stronger our position