Bernanke: US faces credit risk from debt row
THE US could lose its prized AAA credit rating if Washington fails to swiftly resolve the row over the government’s debt ceiling, Federal Reserve chairman Ben Bernanke said last night.
“Even a short suspension of payments on principal or interest on the Treasury’s debt obligations could cause severe disruptions in financial markets and the payments system,” Bernanke said.
Inaction could also “create fundamental doubts about the creditworthiness of the US, and damage the special role of the dollar and Treasury securities in global markets in the long term”, Bernanke added.
The government will begin defaulting on its debts, rising over $14.3 trillion (£8.7 trillion), if Congress does not increase its limit by 2 August, the Treasury Department has warned.
“We could actually have a reprise of a financial crisis, if we play this too close to the line,” President Barack Obama concurred yesterday.