Johannesburg, South Africa (TEH) – The idea of a common currency for the BRICS nations (Brazil, Russia, India, China, and South Africa) has been dismissed as “ridiculous” by Lord Jim O’Neill, the former Goldman Sachs economist who coined the BRICS acronym. This comes as the group prepares for its 15th summit next week in Johannesburg, South Africa.
O’Neill’s comments have added fuel to the fire of skepticism surrounding the Brics’ ability to challenge the US dollar’s status as the world’s reserve currency. While some nations within the bloc, such as Russia and China, have called for a challenge to the dollar, South Africa, the host of this year’s summit, has stated that a BRICS currency is not on the agenda.
“It’s just ridiculous,” O’Neill said in response to calls for a “trading currency” from Brazilian president Luiz Inácio Lula da Silva and other politicians from the bloc. “They’re going to create a BRICS central bank? How would you do that? It’s embarrassing almost.”
The Brics acronym was created by O’Neill in a Goldman paper to highlight the economic potential of the member countries and the need for global economic and political governance to be reshaped to include them. The countries embraced the term and began holding summits in 2009.
The upcoming summit could be a significant leap forward in membership, with more than 40 nations expressing interest in joining the bloc, according to a South African diplomat. However, the criteria for admission have not been decided, and the issue of expansion has emerged as another faultline among the quintet.
The Financial Times reported earlier this year that Saudi Arabia was in talks to join the New Development Bank (NDB), an alternative to the World Bank set up by the BRICS members in 2014.
O’Neill, now a senior adviser at UK think-tank Chatham House, questioned the bloc’s objectives beyond symbolism. He criticized the dollar’s dominance over the global financial system, stating, “The dollar’s role is not ideal for the way the world has evolved.”
The summit has already faced challenges, with Russia’s President Vladimir Putin opting to skip the event due to his indictment by the International Criminal Court (ICC). He will participate remotely, while his foreign minister Sergei Lavrov will attend.
Tensions within the bloc are also evident, with reports suggesting that India opposes the proposal to include more members. O’Neill remarked, “It’s a good job for the West that China and India never agree on anything, because if they did the dominance of the dollar would be a lot more vulnerable.”
The BRICS nations, representing a collective population of more than 3 billion, are keen to increase the use of local currencies in trading activity between member states. However, the idea of a common currency seems to be a distant dream, dismissed by key figures and fraught with challenges.
The upcoming summit will be a critical test for the bloc’s unity and ability to make significant strides in global economic governance. The world will be watching closely to see if the Brics can move beyond symbolism and make tangible progress.
