SEC Chair Gary Gensler has issued a warning that the U.S. Treasury defaulting on its debt obligations may have a huge impact on the investors and markets across the world. He said that the effect of a potential default can be hard to predict and would likely have long-lasting effects. Moreover, Gensler pointed out that the SEC is monitoring the pricing and liquidity of short-dated Treasury bills in view of the potential default and is aware of the subsequent tremors that may arise due to a U.S. Treasury default.

Furthermore, U.S. Treasury Secretary Janet Yellen has warned that things could get pretty dire if the U.S. government fails to raise or suspend the debt limit by June 1 and default on its debt obligations. Such a move would lead to a “catastrophic” fallout as far as the implications of a U.S. Treasury default are concerned.

Given the weight of such a situation, the SEC has taken a direct stance and is making sure to protect investors, facilitate capital creation and ensure smooth functioning of markets in case of a U.S. Treasury default. By monitoring the pricing and liquidity of short-dated Treasury bills, the SEC is doing its part to prepare for any eventualities.

Clearly, defaulting on the U.S. Treasury debt payments may not just impoverish the nation but could possibly lead to a chaotic market and investor landscape. Therefore, the SEC must prioritize its mission of protecting investors and reforming capital markets in view of such circumstances. Everyone has their share of responsibility in averting such a situation, but thankfully the SEC is taking necessary steps to mitigate any adverse effects of a potential U.S. Treasury default.



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