President Barack Obama announced yesterday (31 July) that leaders from both the Republicans and Democrats in the Senate and House of Representatives have finalised a package designed to make sure the US does not default on its debt following the recession.
This measure - which also included plans to decrease the federal deficit by up to $2.5 trillion over the course of the coming decade - is now subject to ratification in Congress.
"The leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default," said Mr Obama.
Furthermore, the president noted that this step makes a "serious down-payment" on the required level of deficit reduction.
This comes after a study by Macquarie Equity Research stated that any credit rating downgrade in America could see banks experience lower critical capital ratios, the Wall Street Journal reported.
By Claire Archer