Emmanuel OchayiThe United States relies on borrowing to fund its economy, and a large part of its debt is held by foreign countries. As of December 2024, foreign investors owned about $8.5 trillion of U.S. debt. This debt is mainly in the form of U.S. Treasury bonds, considered one of the safest investments. Some countries buy these bonds to secure their wealth, while others use them for economic and political leverage.
With total U.S. debt reaching $36.1 trillion in 2024, let’s look at the top 10 countries holding the highest U.S. debt and their reasons for investing in it.
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Foreign countries buy U.S. Treasury bonds because they offer security and stability. The U.S. dollar is the world’s reserve currency, meaning it is widely accepted and trusted. Holding U.S. debt allows nations to stabilise their own economies, influence trade relations, and secure a steady return on their investments.
Now, Prime Business Africa present the breakdown of the top 10 countries with the highest U.S. debt holdings.
Top 10 Countries Holding The Highest U.S. Debt
1. Japan – $1,059.8 Billion
Japan is the largest foreign holder of U.S. debt, with over $1 trillion in U.S. Treasury bonds. Japan buys U.S. debt to manage its currency value and maintain economic stability.
2. China – $759 Billion
China is the second-largest holder of U.S. debt. While the figure has decreased in recent years, China still invests heavily in U.S. bonds to manage its trade surplus and stabilise its economy.
3. United Kingdom – $722.7 Billion
The United Kingdom holds a significant share of U.S. debt, using it as a financial asset to support its banking sector and economic policies.
4. Luxembourg – $423.9 Billion
Despite its small size, Luxembourg is a major investor in U.S. Treasury bonds. Many investment funds based in Luxembourg purchase U.S. debt as a secure financial asset.
5. Cayman Islands – $418.9 Billion
The Cayman Islands is a key player in U.S. debt holdings, mainly due to its role as a financial hub. Many international investment firms based there buy U.S. Treasury securities.
6. Canada – $378.8 Billion
Canada’s strong economic ties with the U.S. make it a major holder of U.S. debt. Canadian financial institutions invest in U.S. bonds as a reliable way to grow their reserves.
7. Belgium – $374.6 Billion
Belgium’s U.S. debt holdings are largely linked to its role as a European financial hub. Many institutional investors in Belgium use U.S. bonds for financial security.
8. Ireland – $336.2 Billion
Ireland holds a significant amount of U.S. debt, mainly through investment funds that use U.S. Treasury bonds as stable assets in their portfolios.
9. France – $332.3 Billion
France invests in U.S. debt to diversify its financial assets and maintain stability in international markets.
10. Switzerland – $288.5 Billion
Switzerland’s financial sector is highly reliant on stable investments, making U.S. Treasury bonds a key part of its reserves.
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How Does Foreign Debt Holding Impact the U.S. Economy?
When foreign countries buy U.S. Treasury bonds, they help fund the U.S. government’s spending. This keeps interest rates low and supports economic growth. However, reliance on foreign debt can also create risks, especially if major holders decide to sell large amounts of U.S. bonds at once.
Countries holding the highest U.S. debt play a crucial role in the global economy. While U.S. Treasury bonds provide security for investors, they also influence trade and international relations. With U.S. debt continuing to rise, these foreign investments will remain an important factor in global financial stability.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
