Debt Default

If the US defaults, short-term Treasuries, the most traded and liquid securities in the world and which often act as collateral for loans to banks and central banks, would lose their cash equivalence. This would immediately boost interest rates demanded by lenders while some lenders would refuse such collateral outright. Worse, as short-term funding is used in so many areas of the economy, the rise in rates would be pervasive.

Share This Post
Facebook Twitter Email

Speak Your Mind


This site uses Akismet to reduce spam. Learn how your comment data is processed.