America, as the largest economy, should not allow default. The head of the ECB is confident that US policy will avoid such a scenario.
Despite the fierce dispute over the debt ceiling, European Central Bank (ECB) President Christine Lagarde does not expect the US to default. “I cannot believe that they will allow a catastrophe so great that the United States cannot pay its debts,” Lagarde said on US television on Sunday (local time).
You have faith in America. “But if it comes, it will have very, very negative consequences not just for this country (…) but for the whole world.” America, as the largest economy, should not allow default. “I understand politics, I’ve been in politics myself,” he added. But there are times when the interests of a country must come first.
The US debt ceiling has been reached
In the United States, Congress sets the debt ceiling at irregular intervals to determine how much the state can borrow. So far the range has been around 31.4 trillion US dollars (about 29 trillion euros). Meanwhile, the current debt ceiling has been reached and the Treasury Department has to tap the balance — because America is no longer allowed to take out any more debt to pay its bills.
Among Republicans in the House of Representatives, however, some hardliners are balking at the issue, and there is no sign of an accord with President Joe Biden’s Democrats. The Independent Budget Office of the US Congress predicts that a default will be imminent between July and September.
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