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US Treasury: Washington's default on its debt could lead to a "global financial crisis" US Treasury Secretary Janet Yellen warned on CNN Friday that a default on US debt will "definitely lead to a recession in the United States and could lead to a global financial crisis." The Treasury secretary was speaking from Dakar, Senegal, as part of a 10-day visit to the African continent, which will also take her to Zambia and South Africa. On Friday, the United States reached the debt ceiling set by Congress, and officials have not yet been able to reach an agreement in this regard. The Treasury launched "extraordinary measures" Thursday to continue meeting its obligations and avoid default, pending a political agreement. Yellen said that in the event of a US debt default, "our borrowing costs will go up, and every American will see their borrowing costs follow the same trend" and she will go up too. "Moreover, failure to make any payments... will undoubtedly lead to a recession in the US economy and could cause a global financial crisis," she added. And she stressed, "This will undoubtedly undermine the role of the dollar as a reserve currency used in transactions all over the world. Many Americans will lose their jobs." And the White House confirmed on Friday evening that President Joe Biden will soon discuss with Republican leader Kevin McCarthy the issue of the US debt ceiling, which is a controversial topic in Washington. Default is likely to cause panic in the financial markets and then in the global economy, at a time when the United States is trying to get through a difficult economic period after Covid without falling into a recession. Source: Al-Quds Al-Arabi
