"As I have said, we have used important tools to act quickly to prevent contagion. And they are tools we could use again," Yellen said in prepared remarks to the U.S. House of Representatives Appropriations subcommittee hearing

"The strong actions we have taken ensure that Americans' deposits are safe. Certainly, we would be prepared to take additional actions if warranted," Yellen added.

Silicon Valley Bank was taken over by federal regulators on March 10, followed days later by Signature Bank . Multiple federal agencies, including the U.S. Department of Justice and the Securities and Exchange Commission, are probing SVB. Global banking markets have been skittish and investors remain fearful of wider economic repercussions.

Given that Congress is divided in control, with Republicans holding a majority in the House of Representatives and President Joe Biden's fellow Democrats leading the Senate, any new legislation in light of the banking crisis would require bipartisan support.

House Financial Services Committee Chairman Patrick McHenry, a Republican, said on Wednesday it was too early to tell if new legislation was necessary after the recent failures of Signature Bank and Silicon Valley Bank.

Biden said last week the banking crisis has calmed down, and promised Americans that their deposits are safe.

Yellen also said supply chain pressures and shipping costs were coming down and were eventually likely to bring down inflation. She added that a U.S. debt default would undermine the dollar's reserve currency status and that a failure to raise the debt ceiling would lead to a recession or worse.