A U.S. debt default would bring unwelcome volatility and represent "the mother of all shocks," Klaas Knot, the Dutch central bank governor, told CNBC Friday.— which refers to the maximum amount of money that the two chambers allow the federal government to borrow. Democratic leaders want the limit to be raised, but Republican lawmakers have called for spending cuts to be agreed before anything is approved.
Time is running out for an agreement, with U.S. Treasury Secretary Janet Yellen warning earlier this month that without a deal, the largest economy in the world could risk default bySpeaking at the sidelines of a G-7 meeting in Japan, Knot, who is also the chair of the Financial Stability Board, said a potential U.S. default, "will create volatility, that volatility is definitely not welcome.
"The banks have to be resilient in order to be able to cope with shocks like this. [A U.S. credit default] would of course be the mother of all shocks so let's agree that we hope that this financial system will not have to cope with these shocks, but so far we have significantly strengthened the solvency, liquidity of the financial institutions," he said.in the first quarter, figures published Friday morning showed, though March gross domestic product was down by 0.
Factors including high inflation squeezing household incomes, falls in wholesale and retail trade and unusually wet weather dampened economic activity.The U.K.'s FTSE 100 was last seen opening 26.2 points higher at 7,751, according to IG. France's CAC 40 was set to open up 23.3 points, Germany's DAX up 40 points and Italy's MIB up 86.4 points.
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