US at risk from eurozone meltdown: Fed

WASHINGTON: A shaky eurozone, with bond market contagion hitting Italy and Spain, poses a risk to the United States, US Federal Reserve Chairman Ben Bernanke said Thursday.

Speaking to senators on Capitol Hill, Bernanke played down the immediate impact on the United States of festering problems in Greece, Ireland and Portugal, "because the three countries are really a very small part of the European continent and the European economy."

But he acknowledged that, the United States' own problems aside, eurozone problems have been causing "a good bit of anxiety in markets."

"That's been affecting our economy, both last summer and now recently as well."

Bernanke said that the exposure of US financial institutions, mutual funds and money market funds to the three countries "are quite small and manageable."

But "were there to be a significant deterioration in conditions in Europe, we would see a general increase in risk aversion, declining asset prices, a lot of volatility in markets," he told senators.

"And we would suffer from that more general financial situation than we would from the direct exposures to those sovereign countries," Bernanke said.

Copyright AFP (Agence France-Presse), 2011