Yellen: We are ready to take more steps

US Treasury Secretary Janet Yellen said that they are ready to do more, if necessary, to ensure the safety of deposits following the crisis in the banking sector in the US. Unlike her speech in the US Senate yesterday, Yellen said that they could take more steps for the stability of the banking sector. Yellen attended the hearing held in the US House of Representatives’ Financial Services and General Government Appropriations Subcommittee on the 2024 fiscal year budget proposal and economic outlook. Noting that they quickly used important tools to prevent contagion following the bankruptcy of Silicon Valley Bank and Signature Bank, Yellen said, “We can use those tools again. We are ready to take additional steps if necessary.” In her speech in the US Senate regarding the 2024 fiscal year budget proposal yesterday, Yellen stated that they did not plan to insure all bank deposits. The change in Yellen’s rhetoric indicates that the Treasury is ready for new urgent actions to prevent the risk of the crisis spreading and to ensure financial stability. Also answering questions from committee members, Yellen responded to a question about the debt limit by saying that increasing the debt limit was “absolutely a must.” Yellen said that the government's failure to make its payments would lead to an economic and financial disaster, and that this would have a "terrible" impact on financial markets. Yellen noted that a US default would weaken the dollar's status as a reserve currency, and warned that failure to increase the debt limit could lead to a recession or worse.