Explained: How a US debt default would affect the global economy

Source: firstpost.com firstpost.com

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The US is grappling with a major challenge to increase its debt limit. Failing to raise the ceiling puts the US Treasury at risk of running out of cash and potentially defaulting on its debts. If the ongoing debt crisis in Washington eventually triggers a recession, America’s economy would hardly sink alone. The repercussions of a first-ever default on the federal debt would quickly reverberate around the world. Orders for Chinese factories that sell electronics to the United States could dry up. Swiss investors who own US Treasurys would suffer losses. Sri Lankan companies could no longer deploy dollars as...