NIIGATA, Japan — The financial leaders of the Group of Seven wealthy nations will meet in Japan beginning Thursday as a standoff over the U.S. debt ceiling looms as one of the biggest potential threats to the global economy.
Treasury Secretary Janet Yellen said one of her priorities in Niigata, a port city on the Japan Sea coast, would be to emphasize the importance of resolving the standoff over the national debt.
“I will underscore the importance of Congress acting to resolve the debt limit to maintain America’s economic leadership and protect the global economy,” Yellen said in a tweet Thursday.
Yellen also is bound to be seeking to reassure her counterparts over recent bank failures that have raised worries over risks for the global financial system.
The finance ministers and central bank governors are meeting for three days ahead of a G-7 summit later this month in Hiroshima.
President Joe Biden said Wednesday that he and congressional leaders had a “productive” meeting Tuesday on trying to raise the nation’s debt limit. They will meet again Friday to try to avert the risk as soon as June 1 of an unprecedented government default if lawmakers in the divided Congress don’t agree to raise the debt ceiling.
Biden said he was “absolutely certain” that the country could avert a default, declaring that failure to meet America’s obligations, upon which much of the world’s finances are based, “is not an option.”
Biden said it was “possible but not likely” that he would need to postpone his trip to Japan, Australia and Papua New Guinea later this month.
Yellen said in remarks prepared ahead of Thursday’s meetings that strengthening the global financial system is a key G-7 priority. So is a renewed show of support for Ukraine as a coalition of over 30 countries seeks to impose heavy economic costs on Russia for its war.
She said Biden’s “historic” investments in modernizing U.S. infrastructure were a step toward improving the resilience of an economy whose reliance on global supply chains was sorely tested during the COVID-19 pandemic.
“We are taking a broad range of individual and joint actions to bring down inflation, sustain growth, and help mitigate the impact of external shocks, including to developing countries,” she said.
The Federal Reserve said in a report this week that U.S. banks raised their lending standards for business and consumer loans in the aftermath of three large bank failures that were in part brought on by…
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