The looming debt ceiling crisis could undermine the status of the US dollar as the world’s reserve currency, according to House Democrat Jim Himes.
In a recent CNN interview, Congressman Himes says the US has never been on the verge of defaulting on its debt before.
Himes says a failure to resolve the debt ceiling face-off could prove “catastrophic” for the prospects of the United States and the dollar.
“The United States has never really come close to defaulting on its debt before, so its hard for us to imagine what that might look like. But of course, it could be catastrophic.
Frankly, the full faith and credit of the United States is the bedrock on which the global financial system is built. And if that comes into question, all kinds of things could happen.
The US dollar, its position as the global reserve currency could be eroded. People may choose to invest in the United Kingdom or in the European Union rather than the United States.”
Himes is not the only government official sounding the alarm on the debt ceiling crisis. Earlier this month, Treasury Secretary Janet Yellen said the US will plunge into an “economic calamity” if Congress fails to raise the debt ceiling.
Former Secretary of State Hillary Clinton also shares the same outlook, saying that the world could witness a “financial meltdown” if the US defaulted on its obligations.
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