The media has been widely discussing the possibility of a deep crisis in the US due to default risk. Analysts stress that the country needs to embark on extraordinary measures to prevent the US government from defaulting.
Earlier, Treasury Secretary Janet Yellen warned US lawmakers that they should strike a deal to raise or extend the debt ceiling. However, the situation has changed drastically. This time, Congress has voiced concerns about the threat of default in the country and a new global financial crisis. The United States will resort to emergency measures to continue financial operations due to the fact that the country has reached the debt ceiling.
"The period of time that extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the challenges of forecasting the payments and receipts of the US government months into the future, exacerbated by the heightened uncertainty in payments and receipts related to the economic impact of the pandemic," Yellen said.
The US Treasury Department warned that the country is at a high risk of facing a default, which may trigger a global financial crisis. Besides, most of the world trade relies on the US dollar, which is unlikely to withhold such pressure. Thus, the clock is ticking for Congress to reach a deal to raise the federal borrowing limit until October 1. If Congress does not raise the debt ceiling, the Treasury Department's borrowing authority will run out. Therefore, Treasury Secretary Janet Yellen is expected to take special measures to avoid a government default.
