G20 Warns US About Effects of Default

Top finance officials from the G20 leading economies looked set to keep their focus on the receding risk of a U.S. default at talks on Friday as hopes grew that Washington could soon clinch a stop-gap deal to ensure it can keep paying its bills.

Officials from across the Group of 20 nations had warned that a failure by the U.S. Congress to raise the nation’s $16.7 trillion debt ceiling would wreak havoc on the global economy.

The U.S. Treasury has said it could quickly run out of cash if the cap is not raised by October 17. A failure to lift it, officials warned, could spark a financial crisis and tip the world’s largest economy into recession with damaging repercussions that would be felt worldwide.

But that risk receded on Thursday as Republicans presented a plan to extend the nation’s borrowing authority, opening a door for talks with the White House. Republicans have sought to use the need to raise the debt limit as leverage to force the White House to agree on budget cuts or to force changes in Obama’s signature health care law.

via Reuters

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