"We are not foreseeing a massive sell-off of US treasuries [bills] on the back of Standard and Poor's decision but we have to acknowledge there is a higher degree of uncertainty about the impact of this type of downgrade because it is unprecedented."
The US had never been downgraded and it was the sole global superpower, he said.
Treasuries were used as collateral for the majority of global swap arrangements.
Foreign sovereign wealth funds and pension funds own huge amounts of treasuries.
"We therefore expect markets will come under additional selling pressure early in the week as market participants continue to shun risk assets and seek out save havens."
China's reaction after the downgrade was both swift and harsh, Mr Young said.
The official Chinese Xinhua news agency wrote: "China, the largest creditor of the world's sole superpower, has every right now to demand the US address its structural debt problems and ensure the safety of China's dollar assets."
Mr Young said the article pleaded for abandoning the US dollar as the world reserve currency, something China has been pressing for several years.
"That said, we are not expecting a systemic risk event.
The Federal Reserve has made it clear that the downgrade by S&P will not impact the way it assesses the balance sheets of financial firms. Moreover, the funding of the financial firms in the US is currently much more solid than it was in 2008.
Financial institutions had already taken remedial action to prepare for a ratings downgrade following the rating agency's decision to place the US on negative watch.
The financial system shocks would be limited, he said.
With both Moody's and Fitch retaining their AAA ratings, the US had a "split-rated" credit rather than a "straight" AA.
China has more than $US1.2 trillion ($NZ1.48 trillion) of US Government debt.
