Issue of coin face value of $1 trillion can't be considered a real way to avoid default, says the head of U.S. Treasury Janet Yellen, The Wall Street Journal reported.

According to her, even if the administration of President Joe Biden decides on such a measure, the plan is unlikely to be approved by the leadership of the Federal Reserve, which performs the functions of the Central Bank in the United States.

On January 19, Yellen told Congress that the total amount of the U.S. national debt has grown to a legally defined maximum and her agency was unable to attract additional borrowing by issuing bonds.

For the next increase in the debt ceiling, set in December 2021 at $ 31.381 trillion, Congress must agree, but with the House of Representatives controlled by Republicans, with obtaining such permission may be a problem. Under these conditions, the idea of issuing a single coin of unprecedentedly large denomination by the Ministry of Finance has gained new popularity. By transferring such a coin to the Federal Reserve, the Treasury would pay a part of the debt and would be able to make new loans without raising the ceiling.

However, Yellen, herself a former head of the Fed (from 2014-2018) and a regular meeting with current regulator chief Jerome Powell, believes that the $1 trillion coin simply won't be accepted by the Fed. In no way should it be taken for granted that the Fed will do anything, and especially when it comes to a stunt like this. The Fed doesn't have to accept it. It's up to them to decide what to do, the Treasury chief told the WSJ.

Current U.S. laws regulate the minting of ordinary (including gold) coins at the discretion of the Treasury, their denomination cannot exceed $50. However, the Treasury is allowed to mint platinum coins of any denomination and there are no restrictions on this issue. This loophole has been proposed to be used for a number of years as a means to prevent a default in case it is impossible to agree on the next increase of the U.S. debt ceiling.