In their endeavor to challenge the supremacy of the US dollar as the principal global reserve currency, the BRICS countries—comprising Brazil, Russia, India, China, and South Africa—have been discussing the concept of a unified currency for quite some time. However, Jim O’Neill, who coined the acronym BRIC (before South Africa’s inclusion) in 2001, sharply criticized this idea.
He said, “It’s almost embarrassing. Are they going to establish a BRICS central bank? How is that supposed to happen?”
With the 15th annual summit of the BRICS nations approaching next week, O’Neill, now a senior advisor at the U.K.-based Chatham House, contended that the alliance has failed to accomplish anything since its inception in 2009 due to constant internal strife.
The urge to move away from the dollar among BRICS countries has intensified since the Ukrainian conflict began, especially as Western sanctions on Russia, facilitated by the dollar’s dominance, took effect.
Questioning the dollar’s supremacy, Brazilian President Luiz Inácio Lula da asked during a state visit to China in April, as reported by the Financial Times, “Why must our trade rely on the dollar? Who decided the dollar would be the currency after abandoning the gold standard?”
Even though the dialogue about moving away from the dollar continues, nearly 60 percent of global currency reserves were in US dollars in 2022, and 88 percent of international transactions were conducted in the currency, based on IMF data. Wall Street also doesn’t seem concerned about immediate challenges to the dollar.
Dylan Kremer, co-chief investment officer at Certuity, a firm that manages around $4 billion, referred to a common BRICS currency as a mere “talk track” and expressed skepticism about the political stability within the BRICS nations to implement such a currency.
He told Fortune that the dollar faces “no immediate threat over the next ten years” and that any rival to the dollar would emerge slowly, akin to a “snowball effect.”
O’Neill pointed to the longstanding rivalry between China and India as a principal reason why a BRICS common currency seems improbable.
He remarked to the Financial Times that it’s fortunate for the West that China and India never agree on anything significant because their consensus could render the dollar more susceptible.
Recent violent clashes along the China-India 2,360-mile border have escalated tensions, resulting in India banning numerous Chinese apps and sanctioning Chinese investment firms.
Disputes over trade and borders have spilled into BRICS gatherings, with India resisting China’s efforts to expand the group’s membership.