If Congress does not approve the rise in the debt ceiling on June 1, the United States will have to declare default.
The United States Secretary of the Treasury, Janet Yellenwarned this Tuesday, May 16, that the United States could fall into default on June 1 if Congress does not approve the rise in the debt ceiling, and pointed out that default would lead to “an unprecedented economic and financial storm that could lead to a recession”.
In this sense, the Joe Biden official said that waiting until the last minute to act could have serious consequences for the confidence of companies and consumers, according to the ANSA agency.
“In my assessment, a US default would cause an economic and financial catastrophe”Yellen told the Independent Community Bankers of America group.
In turn, he stressed that American families, households and firms “they worked hard in recent years to build a historic economic recovery” and noted that “a default would reverse this trend.”
The official emphasized that the financial crisis that could accompany a default “will multiply” the severity of the economic slowdown and that a possible default on the debt would cause “cracks with the risk of shaking the entire system.”
“Time is running out” to avoid non-payment by the United States, he warned, a few hours before the new meeting between Biden and the speaker of the House of Representatives, Kevin McCarthy.
Along these lines, he added that “it is highly conceivable that we will see a number of financial markets break down, with global panic triggering calls for runs and sell-offs”if it happens that the debt ceiling is not raised.
Source: Ambito
