The Federal Reserve likely would not go along with a plan to mint a $1 trillion platinum coin as a means to avoid going over the government's debt ceiling, Treasury Secretary Janet Yellen told The Wall Street Journal.
Some members of the Biden administration and Democrats in Congress have discussed that option in the event of a default, which appears to be a possibility with House Republicans refusing to consent to raise the debt ceiling.
An obscure law allows for the minting of platinum coins to avoid a debt default. It has been discussed in previous years but has never been used. It would involve the U.S. Treasury minting the coin, depositing it in the Federal Reserve, then withdrawing it to pay the country's bills.
Yellen, who previously served as head of the Federal Reserve and meets regularly with its current head Jerome Powell, told the Journal that the Fed may not go along with such a plan as some of its members have expressed reservations in the past about getting involved in congressional fiscal issues.
"It truly is not by any means to be taken as a given that the Fed would do it, and I think especially with something that's a gimmick," Yellen told the Journal. "The Fed is not required to accept it, there's no requirement on the part of the Fed. It's up to them what to do."
A Fed spokeswoman declined to comment to the Journal on the matter.
In 2011, officials with Treasury and the Fed discussed making on-time payments on debt but delaying other bills if no debt ceiling agreement was reached. But Yellen told the Journal on Sunday that type of plan may not be feasible since Treasury's systems were not engineered to prioritize certain types of payments over others.
"You should not assume it's operational and feasible to prioritize," she said.
Some Republicans see such a plan as a way to limit the risk of a debt-ceiling default, the Journal noted.
"Even the prioritization of interest in debt I think it's fair to say is not a foolproof way by any stretch of the imagination for avoiding economic and financial bedlam," Yellen said.
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