Wall Street is implementing its contingency plan to navigate a potential U.S. default, aiming to ensure the smooth functioning of the financial markets.
Concerns range from technical glitches to widespread panic if the United States fails to make payments on Treasurys, which are traditionally considered highly secure, akin to cash.
According to Wall Street’s strategy, investors would continue to trade all U.S. Treasurys, including those with outstanding interest or principal payments, the Wall Street Journal reported.
To maintain order and clarity, a series of prearranged conference calls, meticulously organized by the Securities Industry and Financial Markets Association (SIFMA) trade group, would be conducted, effectively preventing chaos and confusion.
Heading SIFMA’s initiatives is Robert Toomey, a former lawyer at the Securities and Exchange Commission and the New York Fed.
At a recent conference, Toomey expressed that market participants were taken aback when Treasury Secretary Janet Yellen stated earlier this month that the government might face a cash shortage, potentially hindering bill payments as early as June 1 if Congress fails to raise the U.S. debt ceiling by then.
Written by staff