America’s biggest banks are stockpiling extra cash in their ATMs, amid fears that the government shutdown and the threat of a US default will induce a sudden panic among their customers.
Major banks have increased the amount of funds by around a third, and are holding daily meetings in sealed rooms to map out their contingency plans, according to well-placed sources.
In some cases, they are discussing the possibility of extending free credit to customers who do not receive the Social Security payments they would normally rely on, because of the ongoing services blackout.
The US government shut down on Tuesday, after the White House and the Republicans failed to come to an agreement over a stop-gap budget needed to keep scores of services running. Up to 800,000 public sector workers have been put on unpaid leave, and around 1m more are being asked to work for free, in what is the first shutdown for 17 years.
Tensions are now mounting that the faultlines exposed by the shutdown will also affect negotiations over America’s self-imposed $16.7 trillion borrowing limit.
Congress has until October 17 to agree a deal to extend the debt ceiling, or face an unprecented default on US sovereign debt, which could in turn trigger another global recession.
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