BRICS could smash dollar dominance – Jim O’Neill
The status of the US dollar as the kingpin currency could be challenged with time and under certain circumstances by the BRICS group of emerging countries, according to Jim O’Neill, the former Chairman of Goldman Sachs Asset Management.
O’Neill coined the term BRIC – later expanded to include South Africa – and at the time predicted that the four emerging countries (Brazil, Russia, India, and China) were on their way to reshaping the world economy.
“The idea that the dollar will remain king forever, I think, is probably unlikely,” the economist said in an interview with TV show Going Underground. “This is not the first time that people have talked about the end of the dollar, it happens every other year if not with the same intensity” he said, adding that the US currency would probably at some point lose its position.
“I do think if China and India could ever strongly agree on things as the two biggest countries in the emerging world… then that would probably hasten the end of the dollar’s dominance,” he stated.
According to the economist, the shape of the world economy has shifted since the advent of the BRICS concept. In purchasing power parity terms, the BRICS share of global GDP is now greater than that of the G7 in dollar terms, O’Neill pointed out.
According to him, a growing number of countries are considering joining BRICS, but the group of five should determine what new members can actually bring to the table. “In that case it is possible to seriously think that the BRICS countries could be at the basis of some new kind of – not only currency – but some kind of competitor to the US financial system,” O’Neill explained, adding that “in order for the dollar to end, there has to be some alternative.”
Turning to Russia and Western sanctions, the economist said Moscow was doing better than those who imposed the sanctions believed, and that that was essentially due to its strong links with the BRICS member states. However, “it is not entirely clear whether Russia would continue to be able to cope with the persistence of sanctions, because the scale of restrictions is getting tougher,” he warned.
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