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Former Goldman Sachs Chairman: China and India Could Speed up the Demise of the U.S. Dollar

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China and India Could Speed up the Demise of the U.S. Dollar
China and India Could Speed up the Demise of the U.S. Dollar

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According to former Goldman Sachs Chairman Lord Jim O’Neill, India and China, two of the world’s largest economies, will soon dethrone the U.S. dollar as the world’s reserve currency.

While speaking to the Russian government-funded R.T., Lord Jim O’Neill stated: 

“Eventually, as we saw in the United Kingdom, the world’s most actively used currency will ultimately be that of that world’s most important economies. So the idea that the dollar will remain king forever is unlikely.”

With a projected GDP of $23 trillion for 2021, the United States currently has, by a wide measure, the largest economy in the world, followed by China ($18 trillion) and India ($3 trillion), respectively.

However, according to the Goldman Group, led by Kevin Daly and Tadas Gedminas, China’s GDP will overtake that of the United States in around 2035, while India’s GDP will surpass that of the United States in around 2075.

With the inclusion of South Africa, BRICS now signifies an effort to challenge U.S. financial hegemony, which, according to O’Neill, is doable, provided China and India can coordinate their agendas.

“This is not the first time people have talked about the end of the dollar, but it happens every other year, if not with the same intensity, and it never happens. If you look at the pound sterling history and its domination of the world financial markets, it persisted well beyond when the U.K. economy became much smaller as a share of global GDP. At some point, the dollar will lose its dominant status. If China and India could strongly agree on things as the two biggest countries in the emerging world and the only two with more than a billion people each, then that would probably hasten the end of the dollar’s dominance.”

Collapse of US Dollar

In a broad-based assessment of the global economy released on Tuesday that also detailed the biggest dangers to growth globally, Goldman Sachs experts predicted that the long-standing economic “exceptionalism” of the United States would diminish as the 21st century progresses.

de dollarization

Lord Jim O’Neill talks about de-dollarization and the possibility that the Chinese yuan or a projected single BRICS currency will replace the U.S. dollar as the world’s reserve currency. 

O’Neill, a former economist at Goldman Sachs, coined the acronym BRIC more than 20 years ago to refer to the economic potential of Brazil, Russia, India, and China. South Africa joined the organization a few years later, and the acronym BRICS was adopted. Jim is currently the head of Northern Gritstone, a venture capital business.

Jim, however, anticipates that the proposed BRICS currency will displace the U.S. dollar as the global reserve currency. In an interview with I.C. Intelligence’s head economist, Dr. Desné Masie, published on Thursday, he called the idea of a unified currency for the BRICS countries “ridiculous” and “amusing.” He stressed that “China and India never agree on anything,” saying that the two nations “can’t even really agree on basic things like a peaceful border.”

In response to whether the Chinese yuan will supplant the U.S. dollar as the dominant currency, O’Neill stated: “If you are not the largest economy in the world, your currency stops being the most important. Therefore, the dollar will likely be different from what it is now if China eventually surpasses the U.S. in size.”

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