Yellen: We are ready to take more steps

Yellen said that unlike the speech she gave in the US Senate yesterday, they can take more steps for the stability of the banking sector.

Yellen attended the session of the US House of Representatives Financial Services and General Public Appropriations Subcommittee on the fiscal year 2024 budget proposal and economic outlook.

Noting that Silicon Valley Bank and Signature Bank quickly used important tools to prevent contagion after their bankruptcy, Yellen said, “We can use these tools again. We are ready to take additional steps if necessary.”

Yellen, in her speech to the US Senate on the fiscal year 2024 budget proposal yesterday, stated that they are not considering insuring all bank deposits.

The change in Yellen’s rhetoric indicates that the Treasury is ready for new urgent actions to prevent the spread of the crisis and ensure financial stability.

Answering the questions of the committee members, Yellen, upon a question about the debt limit, replied that it is “absolutely essential” to increase the debt limit.

Stating that the failure of the government to make its payments will lead to an economic and financial disaster, Yellen said that this will have a “terrible” effect on financial markets.

Pointing out that a default by the US would weaken the dollar’s status as a reserve currency, Yellen warned that failure to increase the debt limit could lead to a recession or worse.