Yellen rejects $US1 trillion coin idea

US Treasury Secretary Janet Yellen says it is "utterly essential" for Congress to lift the federal debt limit ahead of an October 18 deadline to avoid US default but has added that she opposes using a loophole in US currency law to resolve the crisis.

Yellen told CNBC in an interview that she opposes the minting of a $US1 trillion ($A1.4 trillion) platinum coin to resolve the crisis.

The idea comes from a legal loophole that allows the Treasury to mint platinum coins in any denomination it chooses.

Some progressive commentators and Democratic lawmakers have suggested minting one or more $1 trillion coins to break an impasse in which Republicans have refused to support an increase in the $US28.4 trillion debt ceiling.

"I'm opposed to it and I don't think we should consider it seriously," Yellen said.

"It's really a gimmick."

Yellen said such a move "is equivalent to asking the Federal Reserve to print money to cover deficits that Congress is unwilling to cover by issuing debt. It compromises the independence of the Fed, conflating monetary and fiscal policy."

She added that it would "do the opposite" of showing that Congress and the administration can be trusted to pay US bills.

Asked if she would back a process called "reconciliation" for getting the limit increased without any Republican support, Yellen said: "I support getting it done... We have to raise the debt ceiling as a routine matter whenever the country runs budget deficits."

Yellen added that it was up to Democratic House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer "to figure out" how to raise the debt ceiling in Congress.

"What I can tell you is that it's utterly essential that this be done."

She said she continues to regard October 18 as a deadline for raising the debt ceiling.

That is when the Treasury will exhaust its extraordinary borrowing capacity and will have limited cash reserves that will be expended very quickly.

A default would be "catastrophic" and likely cause a recession, she said, putting the reserve status of the US dollar at risk.

Austrlaian Associated PressBack to Breaking News

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