A. The repercussions would be felt worldwide. Banks in the United States and overseas use Treasurys as collateral when they borrow from each other. If Treasurys were no longer seen as risk-free, it would disrupt borrowing and jolt credit markets. A financial crisis like the one in 2008 could follow.
Banks also hold much of their capital reserves in Treasurys. If they fell in value after a default, banks would have to cut back on lending.