The U.S. government hit its $31.4 trillion borrowing limit on Thursday, a figure that reflects money already spent by the government. Yellen has informed congressional leaders that her department had begun using extraordinary cash management measures that could stave off default until June 5.

"It (default) could cause a global financial crisis. It would certainly undermine the role of the dollar as a reserve currency that is used in transactions all over the world," Yellen said in an interview with CNN, adding that in such a scenario many people would lose their jobs and see their borrowing costs rise.

The White House is refusing to negotiate with hardline Republicans on raising the debt ceiling because it believes enough of them will eventually back off their demands, as a growing chorus of investors, business groups and moderate conservatives warn of the dangers of edging towards a default. Republicans in the U.S. House of Representatives want cuts to some government programs.

Yellen said the debt ceiling was for spending that was already authorized by Congress and did not seek any additional expenditure.

"So it's not about seeking the right to engage in additional spending. It is simply about paying bills Congress has already authorized," she told CNN. "This is something you can't negotiate over or bargain about."

Yellen also discussed her recent meeting with Chinese Vice Premier Liu He and said that China and the United States should continue regular communication and seek prospects for cooperation on matters of global importance like climate change.

"We discussed our cooperation and commitment to work together to address global challenges," she said.