Yellen warns of a "global financial crisis" if there is no deal to increase US debt.

USA: The battle over the debt limit

(CNN) --

Treasury Secretary Janet Yellen warned Friday of the widespread global effects that could be felt if the federal government exhausts extraordinary measures and fails to raise the debt ceiling, telling CNN's Christiane Amanpour about the ways Americans could face dire consequences.

Yellen's warning comes after the United States hit its $31.4 trillion debt limit set by Congress on Thursday, forcing the Treasury Department to begin taking extraordinary measures to keep the government paying its bills. accounts.

While those recently implemented extraordinary measures are largely behind-the-scenes accounting maneuvers, Yellen told Amanpour that “the actual date on which we would no longer be able to use these measures is quite uncertain, but it may come as early as June.”

• What is the US debt ceiling and why is the threat of default so worrying?

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Speaking exclusively to CNN from Senegal, Yellen said that after the measures are exhausted, the US could experience, at the very least, a downgrade of its debt as a result of Congress not raising the debt ceiling.

The effects of the federal government not making payments, he argued, could be as wide-ranging as a "global financial crisis."

“If that happened, our borrowing costs would go up, and all Americans would see their borrowing costs go up, too,” Yellen said.

"On top of that, failure to pay what is owed, whether it's to bondholders or Social Security recipients or our military, would undoubtedly cause a recession in the US economy and could cause a global financial crisis."

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“It would certainly undermine the role of the dollar as a reserve currency used in transactions around the world.

And Americans: a lot of people would lose their jobs and certainly increase their borrowing costs,” he continued.

Yellen wrote a letter to House Speaker Kevin McCarthy on Thursday explaining the steps being taken, increasing pressure on Capitol Hill to prevent a catastrophic default.

Hardline Republicans have demanded that the debt limit increase be tied to spending cuts.

The White House has responded by saying that it will not offer any concessions or negotiate to increase the debt ceiling.

And so far, Yellen's warnings have failed to spark bipartisan discussion, as both Republicans and Democrats reaffirmed their hardline positions over the past week.

As part of the period of suspension of debt issuance using extraordinary measures, the agency intends to sell existing investments and suspend rollovers from the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. .

Likewise, it will suspend the reinvestment of a fund of government securities of the Savings Plan of the Retirement System of Federal Employees.

No retirees or federal employees will be affected, and the funds will be completed once the gridlock ends, Yellen said in the letter.

“I respectfully urge Congress to act expeditiously to protect the full faith and credit of the United States,” he wrote.

CNN's Tami Luhby contributed to this report.

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