Rating agency Fitch has issued a warning that Congressional debate about whether or not to raise the debt ceiling could threaten the U.S.’s ‘AAA’ rating.
The warning illustrates how debt ceiling fights – even if they don’t end in default – can spook markets, potentially creating a risk off event that could also rattle bitcoin.
It also puts into perspective how congressional spats over the debt ceiling threaten the U.S.’s status as the world’s safe haven asset provider.
“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 which caused another rating agency, Standard and Poor (S&P), to downgrade the U.S.’s rating.
Before the House Financial Services Committee on Thursday, Treasury Secretary Janet Yellen advocated for abolishing the debt ceiling.
