Yellen: US default could cause global financial crisis

US Treasury Secretary Janet Yellen stated that if the debt limit is not increased, the default of the USA may lead to a global financial crisis, and the role of the US dollar as a reserve currency may be damaged.

Yellen made evaluations about economics in an interview with CNN television.

Yellen, on the fact that the federal government has reached the debt limit of 31.4 trillion dollars in the USA, said that the US Treasury Department has started to implement wonderful measures, that these measures will continue until the beginning of June, but there is still no guarantee of this.

Yellen, emphasizing that the USA has been a country that has fulfilled all its financial obligations since 1789, stated that the belief that the US government can always pay its debts forms the basis of the global financial system, and that US Treasury bonds are the “safe” assets.

Emphasizing the consequences of a possible US default, Yellen said, “It will undoubtedly cause a recession in the US economy and could cause a global financial crisis. It will certainly undermine the role of the dollar as a reserve currency.” said.

Yellen said that raising the debt limit is a “non-negotiable or negotiable” bet. “America must be a safe borrower who pays all bills that are due on time, and Congress must find a way to do it. It’s always been that way in the past.” he said.

“We’ve seen really good progress on inflation”

Referring to the high inflation in the country, Yellen said that the progress they have made in dealing with inflation encourages her.

“I think we’ve seen really enough progress on inflation in the US,” Yellen said. said.

Stating that inflation continues to be a concern for households, Yellen said that supply chain bottlenecks that increase inflation have been resolved.

Stressing that the Fed is independent and cannot comment on its policies, Yellen said, “I think they are trying to do what they think is necessary to maintain a strong labor market and at the same time ensure that inflation continues to fall.” said.

Evaluating the meeting with Liu Hı, China’s Deputy Prime Minister responsible for foreign trade and international economic links, this week, Yellen noted that the world’s two most valuable economies have a responsibility to cooperate on issues of global importance, including climate change. “We discussed our cooperation and determination to work together to overcome global challenges,” Yellen said. he said.