Owners of the US National Debt
As of January 2023, the US national debt stood at approximately $31.4 trillion, with about 78% of it being debt held by the public, representing cash borrowed from domestic and foreign investors (24% held by foreign investors).
The US debt is held by a diverse set of entities, including foreign governments, American investors, and the US government itself. As of January 2023, the breakdown of the ownership of the US debt is as follows:
- Federal Reserve: $4.9 trillion
- Other Government Accounts: $6.2 trillion
- Foreign Investors: $7.4 trillion
-
Other Domestic Investors:
- Mutual Funds: $2.3 trillion
- Pension Funds: $0.9 trillion
- Insurance Companies: $0.9 trillion
- Banks: $0.8 trillion
- Other Investors: $2.4 trillion.
The table below shows the top foreign country holders of US debt as of January 2023:
| Country/Territory | US Foreign-Owned Debt (January 2023) |
|---|---|
| Japan | $1,104,400,000,000 |
| China | $859,400,000,000 |
| United Kingdom | $668,300,000,000 |
| Belgium | $331,100,000,000 |
| Luxembourg | $318,200,000,000 |
| Switzerland | $290,500,000,000 |
| The Cayman Islands | $285,300,000,000 |
| Canada | $254,100,000,000 |
| Ireland | $253,400,000,000 |
| Taiwan | $234,600,000,000 |
The ownership of US debt has several implications for the US economy and its global standing:
- Foreign Influence: The significant holdings of US debt by foreign governments, particularly China and Japan, raise concerns about the potential leverage these countries may have over the US economy.
- Interest Payments: The US government must make interest payments on its debt, and a large portion of these payments go to foreign entities. This can impact the US budget and trade dynamics.
- Investor Confidence: The diversity of US debt holders can be seen as a sign of confidence in the stability of the US economy and its ability to honor its obligations.
While China's holdings of US debt have declined over the past decade, Japan has slightly increased its purchases of US Treasury securities. Investors in many other countries, including the United Kingdom, Switzerland, and Ireland, have also increased their holdings of US debt.
Foreign ownership of US debt can have implications for the nation's economy and financial markets. When foreign investors purchase Treasury securities, the federal government must send income abroad in the form of interest payments. On the one hand, that foreign investment may help increase US economic activity if the money borrowed from such investors is used for productive purposes, such as stimulating recovery from a recession or funding investments in the nation's economy.
The significant holdings of US debt by foreign governments raise concerns about the potential leverage these countries may have over the US economy. The diversity of US debt holders can be seen as a sign of confidence in the stability of the US economy and its ability to honor its obligations. However, it also raises concerns about the potential impact on economic stability and national security.
Sources of Data:
https://usafacts.org/articles/which-countries-own-the-most-us-debt/
https://www.statista.com/statistics/246420/major-foreign-holders-of-us-treasury-debt/
