US failure to reach debt limit deal may cause global financial crisis: Yellen

By Ovunc Kutlu

ISTANBUL (AA) - The US lawmakers failing to reach a debt limit agreement to raise the debt ceiling may cause a global financial crisis, Treasury Secretary Janet Yellen warned on Friday.

If the US federal government fails to make payments, "borrowing costs would increase" and "a failure to make payments that are due ... would undoubtedly cause a recession in the US economy and could cause a global financial crisis," she told CNN.

Yellen said the date that the Treasury would no longer be able to use its extreme measures is uncertain, but it could come as early as June.

The US has hit its debt limit on Thursday and Yellen said the department has begun using extraordinary measures to avoid default.

"It would certainly undermine the role of the dollar as a reserve currency that is used in transactions all over the world. And Americans – many people would lose their jobs and certainly their borrowing costs would rise," she warned.