Former U.S. Secretary of State Hillary Clinton has cautioned that if the nation fails to pay its debt obligations, it could lead to a worldwide financial crisis. “If Congress keeps refusing to pay, calls for eliminating the dollar as the global reserve currency will grow much louder,” she warned.
Hillary Clinton on U.S. Debt Default and Dollar Losing World’s Reserve Currency Status
Hillary Clinton, a former first lady and the U.S. Secretary of State from 2009 to 2013, voiced her concerns in an opinion piece, published by the New York Times Monday, about the disastrous effects that could result from the U.S. defaulting on its debt responsibilities, including the risk of the dollar losing its status as the world’s reserve currency.
“The debt ceiling debate is not about authorizing new spending. It’s about Congress paying debts it has already incurred. Refusing to pay would be like failing to meet your mortgage commitment, with disastrous global repercussions,” Clinton explained, adding:
Because of the central role of the United States — and the dollar — in the worldwide economy, defaulting on our debts could spark a worldwide financial meltdown.
Noting that “the competition between democracies and autocracies has intensified,” the former first lady noted: “By undermining America’s credibility and the pre-eminence of the dollar, the fight over the debt ceiling plays right into the hands of China’s Xi Jinping and Russia’s Vladimir Putin.”
Clinton said: “Playing games with the debt ceiling puts the dollar’s pre-eminent position in the global economy and the power that gives the United States at risk.”
The former secretary of state detailed that the USD is used in international transactions conducted by people, businesses, and governments around the world. They invest in U.S. Treasury bonds and use U.S. banks “because they trust that America pays its debts, upholds the rule of law and promises stability,” she stressed, noting that it has enabled the U.S. to impose sanctions, such as those against Iran and Russia.
“It’s not surprising that Mr. Xi and Mr. Putin are eager to disrupt the dollar’s dominance and weaken American sanctions,” Clinton said, concluding:
If Congress keeps declining to pay, calls for dethroning the dollar as the global reserve currency will grow much louder — and not just in Beijing and Moscow. Countries all over the world will begin to hedge their bets.
An increasing number of countries are already taking steps to move away from relying on U.S. dollars in trade settlements, including ASEAN countries. In the meantime, the BRICS nations (Brazil, Russia, India, China, and South Africa) are reportedly creating a new currency that will reduce their reliance on the USD.
Do you agree with Hillary Clinton about the consequences of the U.S. defaulting on its debt? Do you think it could lead to the USD losing its global reserve currency status? Let us know in the comments section below.
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