Chile central bank head: U.S. debt-limit showdown is "significant" concern

Reuters

SANTIAGO, Oct 8 (Reuters) - The possibility that the UnitedStates might default on its debt, especially as a shutdown offederal agencies entered its eighth day, is a very significantconcern, Chile's central bank president Rodrigo Vergara said onTuesday.

"It's even more unthinkable that the United States hasproblems with its debt, so much so that ratings agencies havebasically said that this can't happen," Vergara said.

"But the truth is that it is happening and it is a verysignificant concern."

With the two-week old partial government shutdown and animpending Oct. 17 debt ceiling deadline in the U.S. as hisbackdrop, Vergara told an audience of Chilean business leadersthat he believed lawmakers would come to anagreement.

"What could happen is so complex, the damage so great fromthe government shutdown, that the truth is one has no choice butto believe a solution will be reached," Vergara said.

If the U.S. government defaults on debt because it lacksfurther borrowing authority, the results could be "devastating"for the world economy, Olivier Blanchard, the IMF's chiefeconomist, said on Tuesday.

Republicans offered a new approach on Tuesday to resolve thefiscal standoff, proposing creation of a bipartisan panel towork on deficit reduction and find ways to end the governmentshutdown and make recommendations on a debt-limit increase.

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