Which countries hold the most US debt?

by Marco Hogge

The U.S. Treasury issues debt to help the government meet the gap between the amount of money it spends and the revenue it receives.

The U.S. had $25 trillion of debt outstanding through April 2020, about 81 percent or $20.2 trillion of which was public debt. The remaining $4.8 trillion was made up of intragovernmental holdings like Social Security, Medicare and government retirement funds.

About $6.8 trillion of outstanding U.S. public debt was owned by foreign holders, who invest in the securities as a store of value, since they’re viewed as among the safest assets, backstopped by the world’s largest economy.

Japan, which in June 2019 surpassed China as the largest foreign holder of U.S. Treasury securities, had a stash of nearly $1.27 trillion. Treasurys are an appealing alternative to Japanese debt, which has had low or negative yields for years.

China is the No. 2 foreign holder of U.S. debt with more than $1.07 trillion, down from its 2013 peak of $1.32 trillion. Beijing is the world’s largest exporter and most of its foreign reserves are in U.S. dollars, making Treasury securities a safe and easy investment.

The United Kingdom had the third-largest pile of U.S. Treasury securities at $368.5 billion. The U.K.’s holdings hit a record high of $403.2 billion in February 2020, the month after its departure from the European Union.

Ireland was the fourth-biggest holder of U.S. debt, at $300.2 billion, as many American corporations operate offshore companies in the country due to its business-friendly environment and favorable tax structure.

Luxembourg, the fifth-largest holder of U.S. debt at $265.5 billion, also has tax-shelter benefits.

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