Russian central bank sees bad scenario for U.S. debt as unlikely
MOSCOW. May 29 (Interfax) - A bad scenario for U.S. government debt is unlikely to come about, it is "hypothetical," Central Bank of Russia (CBR) first deputy governor Ksenia Yudayeva said at a press conference on the CBR's report on risks to financial stability.
"I hope there won't be a default. Today there were already reports that negotiations are going fairly well. Of course, if there are nonpayments, this is fraught with volatility on the markets. Above all it is necessary to think about how to live in these new conditions," Yudayeva said.
"For Russia, now, as we know, volatility on its own is less important, simply because our markets are closed - on one hand sanctions and on the other our own restrictions, but there will be indirect effects through foreign markets," Yudayeva said.
These effects could manifest themselves if the critical scenario comes about, but such a turn of events seems unlikely, she said.
"If there will be a substantial reduction, substantial nonpayments, it could influence global demand, demand for our exports, so this will reach us, as usual, through the export revenue of our companies. But, again, I think that this is all a very hypothetical scenario," Yudayeva said.
U.S. President Joe Biden said last Thursday that negotiations with Republican members of Congress on how to avoid a default were going well but not finished yet. The U.S. debt ceiling is currently $31.4 trillion and talks to raise it have been underway for months. If a deal is not reached, the Treasury Department could run out of money by June 1, Treasury Secretary Janet Yellen said earlier.