June 1, 2023

WASHINGTON US Treasury Secretary Janet Yellen confirmed on Thursday that she is ready to take further action to keep Americans’ bank deposits safe amid the turmoil in the banking system.

“As I said before, we used important tools to act quickly to prevent infection,” Yellen said in her speech at the US House Appropriations Subcommittee hearing.

“These are tools that we could use again for an institution of any size if we considered that its failure would pose a systemic risk,” she added.

The Silicon Valley Bank was turned over to federal regulators on March 10, followed a few days later by Signature Bank. Several federal agencies, including the US Department of Justice and the Securities and Exchange Commission, are investigating the SVB.

The global banking markets have been skittish, and investors remain wary of the broader economic repercussions.

Given that control in Congress is divided, with Republicans holding a majority in the House of Representatives and President Joe Biden’s fellow Democrats leading the Senate, any new legislation in light of the banking crisis will require bipartisan support.

House Financial Services Committee Chairman Patrick McHenry, a Republican, said Wednesday it was too early to say new legislation is needed after two bank failures.

Biden said last week that the banking crisis had subsided and promised Americans that their deposits were safe.

Yellen also said supply chain pressures and shipping costs are coming down, which will likely lead to lower inflation in the long run.

Separately, on the issue of the debt ceiling, the Treasury Secretary said that a US debt default would undermine the dollar’s reserve currency status and that failure to raise the debt ceiling would lead to a recession or worse.

Republicans in the U.S. House of Representatives are working on a “fast track” of terms that Democrats would like to agree to in exchange for voting to raise the federal government’s $31.4 trillion debt ceiling later this year, House Budget Committee Chairman Jody said Thursday. Arrington. .

Yellen also told lawmakers that Russia and China have an incentive to try to develop an alternative to the US dollar, but it will be “extremely difficult” for them to do so.

“I certainly want the dollar to remain the world’s reserve currency, and there is a reason why Russia and China should try to develop a different system that avoids the use of the dollar,” Yellen said.

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