15 Jun 2011

Warning on debt deadline issued by Bernanke

12:10 pm on 15 June 2011

US Federal Reserve chairman Ben Bernanke says America's creditworthiness is at risk if the government's borrowing limit is not raised.

Mr Bernanke said that in the absence of a quick resolution to the debt limit, the United States could lose its AAA credit rating, while the dollar's special status as a reserve currency might be damaged.

''Even a short suspension of payments on principal or interest on the Treasury's debt obligations could cause severe disruptions in financial markets and the payments system,'' he said on Tuesday.

The BBC reports he urged Republican members of Congress to vote in favour of increasing the limit, well before the deadline of 2 August.

The Treasury Department has warned the federal government will begin defaulting on its obligations if Congress does not increase the limit by then.