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Central banks brace for U.S. default

Financial firms create contingency plans

The debt ceiling deadline is just a few days away, with a potential U.S. default hanging in the balance.

As a result, central banks are taking added precautions and creating contingency plans on how they plan to keep the financial markets working if the U.S. defaults.

“Because in the past it’s always been sorted out is absolutely not a reason to fail to do the contingency planning,” Jon Cunliffe, who joins the Bank of England as deputy governor for financial stability next month, told U.K. lawmakers yesterday. “I would expect the Bank of England to be planning for it. I’d expect private-sector actors to be doing that, and in other countries as well.”

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