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Fitch: Debt Ceiling Fight Could Endanger ‘AAA’ Rating of US
The warning illustrates how the debate can create an aversion to risk that could rattle bitcoin.
Updated May 11, 2023, 3:37 p.m. Published Oct 1, 2021, 2:32 p.m.
Rating agency Fitch has issued a warning that congressional debate on whether to raise the debt ceiling could threaten the ‘AAA’ rating of the United States.
The warning illustrates how debt ceiling fights – even if they don’t end in default – can spook markets, potentially creating an aversion to risk among investors that could rattle bitcoin.
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It also puts into perspective how congressional spats over the debt ceiling threaten the U.S.’ status as the world’s provider of safe-haven assets.
“Fitch believes that the debt limit will be raised or suspended in time to avert a default event, but if this were not done in a timely manner, political brinkmanship and reduced financing flexibility could increase the risk of a U.S. sovereign default,” the agency said.
Fitch’s note is reminiscent of the 2011 debt ceiling fight that caused another rating agency, Standard and Poor (S&P), to downgrade the U.S.’ rating.
Speaking before the House Financial Services Committee on Thursday, Treasury Secretary Janet Yellen advocated for abolishing the debt ceiling.
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