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Biggest US creditors show concern on government stalemate

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(Credit: Reuters) The image shows Republicans outside the US Capitol.US Capitol
October 8
1:40 AM 2013

Two of the biggest foreign creditors of the US are Japan and China. The two nations had expressed their concern over the risk of a first ever default on US debt. This was after the US President Barack Obama and Republicans had not reached a deal to resolve budget issues that caused the nation's partial shutdown.

According to Japanese Finance Minister Taro Aso in a statement today at a press briefing in Tokyo, Japan must consider the impact of a default on its Treasury holdings. This was despite the probability that the US would avoid a fiscal crisis. Deputy Finance Minister Zhu Guangyao said that the US should prevent a default, reported by the People's Daily yesterday.

In a data shown by the US Treasury Department, China holds USD1.28 trillion in Treasuries while Japan has USD1.14 trillion. According to a Bloomberg report, any shift in asset allocation by major holders of the securities could increase US interest rates and could cause swings in global currency markets.

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