(Bloomberg) -- A failure to raise the U.S. debt ceiling could hurt the status of the greenback, even though China’s renminbi is still a long way from seriously rivaling it as a global reserve currency.
That’s the view of U.S. Treasury Secretary Janet Yellen, who told lawmakers on Tuesday that a ceiling-related default would undermine the dollar’s status as an “absolutely secure” asset during turbulent economic times.
“China has a long way to go in reforming its financial markets before the renminbi is a serious rival to the dollar,” Yellen said in testimony to the Senate Banking Committee. “But I can’t think of anything more harmful to the role of the dollar than failing to raise the debt ceiling.”
The Treasury Department is set to run out of cash on about Oct. 18 unless Congress suspends or increases the debt limit, Yellen said Tuesday.
That timeline is somewhat sooner than many on Wall Street had anticipated, and her warning intensified signs of financial-market concern amid an impasse between Republicans and Democrats on addressing the debt ceiling.
©2021 Bloomberg L.P.
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