Biggest US creditors show concern on government stalemate
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.