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ECB stimulus pits euro vs. yen: O'Neill

Europe stands to enter into currency competition with Japan if the European Central Bank moves forward with quantitative easing through sovereign bond purchases, Jim O'Neill, former chairman of Goldman Sachs Asset Management, told CNBC on Wednesday.

ECB Vice President Vitor Constancio of Portugal on Wednesday gave the clearest indication yet that the central bank may start buying sovereign debt in the first quarter of next year.

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O'Neill noted that Japan has been using more aggressive versions of the same tools and said it hasn't helped its economy other than by weakening the yen.

"If [Europe] were the only part of the world that were doing it, then it marginally would be great," O'Neill told "Squawk Alley."

"I guess this will probably result in weakening the euro more for a while, but then how can the euro and yen weaken both at the same time by such a degree that either one can gain?" he asked.

If the United States perceives that the only consequence of the stimulus measures is a weakened euro and yen, it could intervene, especially if U.S. companies begin to face foreign exchange pressure, he said.

O'Neill said he's more intrigued by the announcements coming out of Brussels regarding fiscal policy and leveraged infrastructure spending.

Read More EU unveils giant $392B jobs plan

On Wednesday, European Commission President Jean-Claude Juncker announced a €315 billion ($392 billion) plan to create jobs through infrastructure spending funded by private and public financing.

"That strikes me as being something a bit new and might be of more lasting benefit to help some of these countries get out of some of the considerable challenges they still face," O'Neill said.