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- The economist who coined the term 'BRICS' believes the bloc's plans to create a common currency are 'ridiculous'.
- Lord Jim O'Neill waved away the possibility of the group of countries ever challenging the dollar's dominance.
- Officials of the five emerging economies meet next week to discuss whether to expand the bloc.
Lord Jim O'Neill, the former Goldman Sachs economist who first gave the BRICS bloc its name, has slammed the idea of the five emerging nations ever collaborating to create a common currency.
The group – which comprises Brazil, Russia, India, China and South Africa – has been calling for ways to end the dollar's dominance as the world's premier reserve currency, and Brazilian president Luiz Inácio Lula da Silva has called for a common trading note between them.
But O'Neill, who coined the term back in a 2001 research paper, is totally unconvinced.
"It's just ridiculous," he told the Financial Times in an interview on Monday. "They're going to create a BRICS central bank? How would you do that? It's embarrassing almost."
The economist spoke ahead of the 15th BRICS summit next week, where the nations will meet to decide whether to expand membership to other countries and may also float the idea of the common currency – though South Africa denies that this is on the agenda.
Dedollarization is the latest buzzword to capture the market's imagination and refers to efforts aimed at undermining the greenback's command of global trade by promoting the use of other currencies instead.
Proponents of the idea point to the fact that the dollar's share of global reserves has fallen over the past two decades – though it still makes up nearly 60% of the world's foreign exchange holdings, according to the IMF.
In the interview, O'Neill criticized the dollar's role in directing the movements of other currencies around the world.
"The dollar's role is not ideal for the way the world has evolved," he said. "You've got all these economies who live on this cyclical never-ending twist of whatever the [US Federal Reserve] decides to do in the interests of the US."
But he does not see a future in which the renminbi, yen, or euro could surpass the US currency.
"None of these things will ever happen until those countries want to have their currencies used by people in other parts of the world," he said.