Page 21 - CCFA Journal - 11th Issue

加中金融 ChatGPT

CCFA: What happens if the debt ceiling is breached?

ChatGPT: If the debt ceiling is breached and the U.S. government is unable to meet all of its financial obligations, it can have
severe consequences for financial markets, the economy, and the country's credit rating. Here are some potential outcomes:
Default Risk: Breaching the debt ceiling raises the risk of a potential default on U.S. government debt. The government may not
have enough cash on hand to fulfill all its financial commitments, such as making payments on Treasury bonds, paying Social
Security benefits, or funding government programs. A default would undermine the credibility and trust in U.S. Treasuries, which
are considered one of the safest investments globally. It could have cascading effects on financial markets, leading to increased
borrowing costs, market volatility, and potentially triggering a broader financial crisis.
Financial Market Turmoil: The uncertainty surrounding a potential default and the disruption in the functioning of Treasury
markets can lead to significant turmoil in financial markets. Investors may demand higher yields on Treasury bonds, causing
interest rates to rise not only for the government but also for other borrowers, such as corporations and individuals. This can
dampen economic activity, reduce investment, and harm consumer spending.
Economic Contraction: Breaching the debt ceiling and the resulting financial market turmoil can negatively impact the broader
economy. Higher borrowing costs can discourage business investment and consumer spending, leading to a slowdown in
economic growth. Reduced economic activity can result in job losses, lower wages, and decreased tax revenues for the
government, exacerbating fiscal challenges.

Damage to U.S. Credit Rating: A breach of the debt ceiling can lead credit rating agencies to downgrade the U.S. government's
credit rating. A downgrade would indicate that the risk associated with U.S. government debt has increased, leading to higher
borrowing costs for the government and potentially spilling over into other areas of the economy. It could also damage the
perception of the United States as a safe haven for investors and erode confidence in the U.S. dollar as the world's reserve
currency.

To mitigate these risks, the U.S. Treasury has employed measures known as "extraordinary measures" to temporarily extend the
government's ability to meet its financial obligations, as mentioned in the previous response. However, these measures offer only
temporary relief. Ultimately, a resolution to raise the debt ceiling or reach a budget agreement is crucial to avoid breaching the
debt ceiling and the associated risks to the economy and financial markets.

CCFA: 如果债务上限被突破会发生什么?

ChatGPT: 如果债务上限被突破，美国政府无法履行其所有的财政义务，这可能会对金融市场、经济和国家的信用评级产
生严重后果。以下是一些潜在的结果:

违约风险: 突破债务上限增加了美国政府债务潜在违约的风险。政府手头可能没有足够的现金来履行所有的财政承诺，比
如支付国债、支付社会保障福利或为政府项目提供资金。美国国债被认为是全球最安全的投资之一，违约将损害人们对美
国国债的信誉和信任。它可能对金融市场产生连锁反应，导致借贷成本上升、市场波动，并可能引发更广泛的金融危机。

金融市场动荡: 围绕潜在违约的不确定性和美国国债市场运作的中断可能导致金融市场的重大动荡。投资者可能会要求更
高的国债收益率，这不仅会导致政府的利率上升，还会导致企业和个人等其他借款人的利率上升。这会抑制经济活动，减
少投资，损害消费者支出。

对美国信用评级的损害: 突破债务上限可能导致信用评级机构降低美国政府的信用评级。评级下调将表明与美国政府债
务相关的风险增加，导致政府借贷成本上升，并可能蔓延到其他经济领域。它还可能损害美国作为投资者避风港的形象，
并削弱人们对美元作为全球储备货币的信心。

CCFA: What are some things central bankers can do to avoid breaching the debt ceiling without always raising the limit?

ChatGPT:
Extraordinary Measures: The U.S. Treasury can employ extraordinary measures, as it has done in the past, to temporarily create
additional headroom under the debt ceiling. These measures can include suspending or modifying certain government activities,
reallocating funds, or using accounting techniques to delay payments or manage cash flows. However, these measures only
provide temporary relief and are not a long-term solution.

Prioritization of Payments: The Treasury, with guidance from Congress, can prioritize payments in the event of a debt ceiling
breach. This involves allocating available funds to cover the most critical obligations, such as interest payments on Treasury bonds,
Social Security benefits, and essential government services. By prioritizing payments, the government can ensure that it meets its
most important financial commitments while managing limited cash flow. However, this approach can be challenging and
controversial, as it requires determining which obligations are deemed most essential.

CCFA JOURNAL OF FINANCE July 2023 Page 21 第21页