US default on debt would trigger an 'economic catastrophe,’ Yellen has said

4/25/2023

US default on debt would trigger an 'economic catastrophe,’ Yellen has said.

"A default on our debt would produce an economic and financial catastrophe," Yellen told Sacramento Metropolitan Chamber of Commerce members. "A default would raise the cost of borrowing into perpetuity. Future investments would become substantially more costly."

"Congress must vote to raise or suspend the debt limit. It should do so without conditions. And it should not wait until the last minute."

In March, Yellen said that the US financial system is safest and most liquid in the world.

She also said in early March deposits in US. Banks will be guaranteed only if a systemic risk determination is issued.

Yellen said: “A bank only gets that treatment if a majority of the FDIC board, a supermajority of the Fed board, and I in consultation with the president, determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”

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