July 29, 2011
WASHINGTON — IMF chief Christine Lagarde warned Thursday that failure to resolve the US debt crisis would likely raise “doubts” about the dollar’s status as the world’s prime reserve currency.
“It would probably entail a decline of the dollar relative to other currencies, and probably doubts in the mind of those people who reserve currencies as to whether the dollar is effectively the ultimate and prime currency of reserve,” she told PBS television in an interview.
Her comments, excerpts of which were released by the broadcaster, came as Republicans and Democrats remained locked in a showdown over rival plans to raise the US debt ceiling and stave off a looming default.
A Republican plan was expected to go to a vote in the House of Representatives later Thursday, but Democrats have warned it would be dead on arrival in the Senate.