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A standoff in Washington over raising the U.S. debt ceiling overshadowed a meeting of Group of Seven (G7) finance leaders’ starting on Thursday, heightening U.S. recession fears as central banks seek a soft landing for the global economy.
President Joe Biden piled pressure on Republican lawmakers on Wednesday to move quickly to raise the limit on the government’s permitted borrowing from the current $31.4 trillion or risk throwing the world’s biggest economy into recession.
Treasury Secretary Janet Yellen was expected to face questions from her G7 counterparts, meeting in the Japanese city of Niigata, on how Washington intends to prevent turbulence in financial markets, already jittery after the recent failure of three U.S. regional banks.
“A default would threaten the gains that we’ve worked so hard to make over the past few years in our pandemic recovery. And it would spark a global downturn that would set us back much further,” Yellen said in Niigata on Thursday.
The U.S. debt crisis is a headache for Japan, which is this year’s G7 chair and the world’s biggest holder of U.S. debt.
“We won’t go into such specific subjects,” Japanese Finance Minister Shunichi Suzuki told reporters on Thursday, when asked what kind of solution Japan wanted from the United States.
