There will be no USD 1 trillion coin

The administration of US President Barack Obama ruled out on Saturday calls for minting a $1 trillion platinum coin to avert a crisis over the US debt ceiling amid partisan bickering.

The US Treasury officially killed the idea, leaving Congress with the responsibility to increase the government’s borrowing limit.

- Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit - Treasury spokesman Anthony Coley said.

The notion had already been put forward during the 2011 debt ceiling debacle, and was revived this year amid fears that Congress will not clinch a deal and thus risk causing the US to default on its bills and financial obligations.

Supporters said the platinum coin would have helped avert a repeat of the 2011 crisis, when the US came perilously close to defaulting on its debts as Republicans sought deep spending cuts in return for more government borrowing.

Had the Fed recognised its worth, the Treasury could have minted the coin to help fulfil debt obligations if legislators failed to come to an agreement.

Although US laws regulate the amount of paper, gold, silver and copper currency the government can circulate at any given time, there are no such limits for platinum.

But one of the drawbacks of the idea was that it could have jeopardised the central bank’s independence.

Nobel economics laureate Paul Krugman had dismissed the proposal as “silly” but “benign”, although giving it some publicity by doing so.

Democrats had made a plea in support of the $1 trillion coin, a proposal quickly denounced by Republicans.