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This report presents current data on estimated ownership of United States Treasury securities and
major holders of federal debt by country. Federal debt represents the accumulated balance of
borrowing by the federal government. To finance federal borrowing, U.S. Treasury securities are
sold to investors. Treasury securities may be purchased directly from the Treasury or on the
secondary market by individual private investors, financial institutions in the United States or
overseas, and foreign, state, or local governments. Foreign investment in federal debt has grown
in recent years, prompting questions on the location of the foreign holders and how much debt
they hold.
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Selected Statistics on Foreign Holdings of Federal Debt ................................................................ 1
Foreign Investment in U.S. Federal Debt: Why Is It an Issue of Concern? .................................... 3
Selected CRS Reports ..................................................................................................................... 5
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Figure 1. Breakdown of Official vs. Private Foreign Holdings of U.S. Federal Debt..................... 3
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Table 1. Estimated Ownership of U.S. Treasury Securities............................................................. 1
Table 2. The Top 10 Foreign Holders of Federal Debt, by Country................................................ 2
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Author Contact Information ............................................................................................................ 5
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Federal debt represents, in large measure, the accumulated balance of federal borrowing of the
U.S. government. The portion of gross federal debt held by the public consists primarily of
investment in U.S. Treasury securities.1 Investors in the United States and abroad include official
institutions such as the U.S. Federal Reserve, financial institutions such as private banks, and
private individual investors. Table 1 provides December 2008 data, available as of March 2009,
on estimated ownership of U.S. Treasury securities by type of investment and the percentage of
that investment attributable to foreign investors.2
As the table shows, during the past five years, foreign holdings of debt increased by nearly $1.6
trillion to more than $3 trillion from December 2003 to December 2008. During the same period,
total privately held debt increased by approximately $2.5 trillion to $5.9 trillion.
In December 2003, total foreign investment in U.S. federal debt was approximately $1.5 trillion
(45.4%) of the total approximately $3.4 trillion in privately held debt. By December 2008, total
foreign investment in U.S. federal debt grew by 7.6 percentage points to $3.125 trillion (53%) of
the total approximately $5.9 trillion in debt held by private investors.3
Table 1. Estimated Ownership of U.S. Treasury Securities
(in billions of dollars)
End of
Total Public Debt
Total Debt Held by
Foreign Holdings as a
Month
Held by All
Share of Total
Private Investors
Foreign Investors
Privately Held Public Debt
Dec. 2008
$5,893.4
$3,125.0
53.0%
Dec. 2007
$4,395.7
$2,352.9
53.5%
Dec. 2006
$4,122.1
$2,105.0
51.1%
Dec. 2005
$3,970.6
$2,036.0
51.3%
Dec. 2004
$3,690.6
$1,853.4
50.2%
Dec. 2003
$3,377.9
$1,533.0
45.4%
Source: Table OFS-2: Estimated Ownership of U.S. Treasury Securities from the March 2009 Treasury Bulletin.
See link for “Ownership of Federal Securities” tables at http://www.fms.treas.gov/bulletin/index.html. Data in the
table above represent estimated figures current as of March 9, 2009. For the most current data, connect to the
link listed above. Percentage shares calculated by CRS.
1 Figures on federal debt held by the public are available on the Department of Treasury Bureau of Public Debt website,
“The Debt to the Penny and Who Holds It,” at http://www.treasurydirect.gov/NP/BPDLogin?application=np.
2 This report discusses foreign holdings of U.S. federal debt. Foreign investors also hold U.S. private securities. For
data on foreign holdings of U.S. private securities, see “Survey of Foreign Holdings of U.S. Securities,” at
http://www.ustreas.gov/tic/shlhistdat.html, produced by the Treasury Department International Capital System.
3 Data are excerpted from Table OFS-2 in the March 2009 Treasury Bulletin. Table OFS-2 presents the estimated
ownership of U.S. Treasury securities. Information is primarily obtained from the Federal Reserve Board of Governors
Flow of Funds data, Table L209. State, local, and foreign holdings include special issues of nonmarketable securities to
municipal entities and foreign official accounts. They also include municipal, foreign official, and private holdings of
marketable Treasury securities.
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Notes: Although gross federal debt is the broadest measure of the debt, it may not be the most important one.
The debt measure that is relevant in an economic sense is debt held by the public. This is the measure of debt
that has actually been sold in credit markets and has influenced interest rates and private investment decisions.
This table reflects that portion of public debt held by all private investors in federal securities and the portion of
that debt held by foreign investors. See CRS Report RL31590, The Federal Government Debt: Its Size and Economic
Significance, by Brian W. Cashell.
Data on major foreign holders (investors) of federal debt by country are provided in Table 2.
According to the data, the top three estimated foreign holders of federal debt by country, ranked
in descending order as of December 2008, are China ($727.4 billion), Japan ($626 billion), and
Carribean Banking Centers ($197.5 billion). Based on these estimates, China holds approximately
23.6 % of all foreign investment in U.S. privately held federal debt; Japan holds approximately
20.3 %; and Carribean Banking Centers hold approximately 6.4%.4
Table 2. The Top 10 Foreign Holders of Federal Debt, by Country
(Data current as of March 9, 2009)
Amount
Percentage of
Amount
Percentage of
Country
Held ($ in
all foreign
Held ($ in
all foreign
billions; as of
holdings in
Country
billions; as of holdings in
Dec. 2008)
federal debt
Dec. 2003)
federal debt
Mainland China
$727.4
23.6%
Japan
$550.8
36.2%
Japan $626.0
20.3%
Mainland
China
$159.0
10.4%
Carribean Banking
$197.5 6.4%
Centers
United Kingdom
$82.2
5.4%
Oil Exporters
$186.2
6.1%
Korea
$63.1
4.1%
United Kingdom
$130.9
4.3%
Taiwan
$50.9
3.3%
Brazil $127.0
4.1%
Hong
Kong
$50.0
3.3%
Russia $116.4
3.8%
Germany
$47.8
3.1%
Luxembourg $97.4 3.2%
Carribean
Banking Centers
$47.3 3.0%
Hong Kong
$77.2
2.5%
Switzerland
$46.1
3.0%
Taiwan $71.8
2.3%
Oil
Exporters
$42.6
2.8%
Total Top 10
Total Top 10
Countries of
Countries of
Foreign Investors
$2,357.8 76.6%
Foreign Investors
$1,139.8 74.8%
in Federal Debt
in Federal Debt
Total All Foreign
Total All Foreign
Investment in
$3,076.9 100%
Investment in
$1,523.1 100%
Federal Debt
Federal Debt
Source: The Treasury Department International Capital System (TIC) provides data on estimated foreign
holders of federal debt historically by month on its website at http://www.treas.gov/tic/mfhhis01.txt. Current
monthly estimates are available at http://www.treas.gov/tic/mfh.txt.
4 Foreign holdings are estimated by the Treasury Department based on the location of the holdings, not the nationality
of the holder. For certain countries, such as the Carribean Banking Centers, many of the holdings are likely owned by
third country citizens.
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Notes: Data, including historical data, in these Treasury Department tables are periodically adjusted. Data in the
table above represent estimated amounts current as of March 9, 2009. For the most current data connect to the
link listed above. Aggregate data totals in Table 1 vary slightly from aggregate data totals in Table 2 because of
minor valuation differences of a few securities for a few of the countries in the complete list of International
Financial Statistics data used by the TIC data. Percentage approximations calculated by CRS. Percentages may
vary slightly due to rounding.
Foreign holdings as estimated by the Treasury Department can be divided into official
(governmental investment) and private sources. Figure 1 provides data on the current breakdown
of estimated foreign holdings in U.S. federal debt. As the figure shows, 69.5% of foreign holdings
in U.S. federal debt are held by governmental sources. Private investors hold the other 30.5%.
Figure 1. Breakdown of Official vs. Private Foreign Holdings of U.S. Federal Debt
Billions of Dollars
$938.20
30.5%
$2,138.70
69.5%
Debt Held by Official Foreign Investors
Debt Attributed to Private Foreign Investors
Source: Treasury Department International Capital System, http://www.treas.gov/tic/mfhhis01.txt.
Notes: Data in the chart represent estimated figures current as of March 9, 2009. Data in the Treasury
Department tables are periodically adjusted. For the most current estimates, click on the URL address listed
above.
The estimated combined total of all foreign holdings for December 2008 was $3,076.9 billion. Data consist of
reported December 2008 figures from the Treasury Department International Capital System
http://www.treas.gov/tic/mfh.txt. The breakdown between estimated official and private holdings is not publically
available on a country-by-country basis. Percentages approximated by CRS.
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Foreign ownership of federal debt has become a growing concern among some Members of
Congress because of the nation’s large and rising trade deficit. During the past three decades, U.S.
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national saving has not been adequate to finance its capital investment needs and borrowing from
abroad has covered the gap. In order for foreigners to invest in the U.S. economy on net, the
United States must import more than it exports (run a trade deficit). When the government runs a
budget deficit, as it has done since 2002, it reduces the national saving rate. This implies that
domestic investment must fall, unless private saving rises or borrowing from abroad increases.5
As seen in Table 1, as the national debt has increased, foreign ownership of U.S. Treasuries has
followed closely, suggesting that the budget deficit has been financed, in part, through borrowing
abroad. By June 2004, foreigners held more than 50% of the public debt held by private investors
for the first time. Although this percentage has no particular economic significance, it may have
other significance.
Since 2002, some observers have been concerned that the nature of foreign purchases of U.S.
Treasuries has changed. Beginning in that year, a significant fraction of the trade deficit was
financed through official purchases of U.S. assets, such as purchases by foreign central banks.
Although no direct data on official purchases of Treasuries by country exist, it can be inferred that
the Treasuries may have been purchased by certain Asian and oil producing countries because
they were the only countries that had large increases in their foreign reserves during that period.
Although the effect on the U.S. economy of official purchases of Treasuries is the same as private
purchases, the motivations behind the purchases are different. Whereas private purchases are
typically motivated by the profit incentive, official purchases may be motivated by a country’s
desire to keep its exchange rate constant or mitigate its rise against the dollar.6 Many observers
are concerned that the large fraction of national debt held by foreigners has the potential to be
harmful to the U.S. economy. Specifically, they fear that if foreigners suddenly decided to stop
holding U.S. Treasury securities or decided to diversify their holdings, the dollar could plummet
in value and interest rates would rise. Others are concerned that China’s accumulation of hard
currency assets will allow it to undertake activities in the foreign affairs and military realms that
are not in the U.S. interest. Some economists argue that foreign borrowing at current levels is
unsustainable and could cause problems for the U.S. economy down the road.7
When foreigners purchase U.S. Treasuries, or any other U.S. asset, the interest rate is lower than
when borrowing is financed domestically out of national saving. Thus, when overall interest rates
are lower as a result of net capital inflows, more interest-sensitive spending is undertaken.
Interest-sensitive spending includes capital investment (e.g., production plants and equipment),
residential investment (e.g., new homes), and durable consumption goods (e.g., automobiles and
appliances). On the other hand, U.S. foreign borrowing induces a trade deficit by reducing
exports and import-competing production. The trade deficit occurs because foreigners must first
purchase U.S. dollars before purchasing U.S. assets. When the demand for dollars increases, the
dollar appreciates, making U.S. exports and import-competing goods relatively more expensive.
Thus, foreign borrowing shifts production out of the trade sector and into the interest-sensitive
sector.8
5 CRS Report RS21409, The Budget Deficit and the Trade Deficit: What Is Their Relationship?, by Marc Labonte and
Gail E. Makinen.
6 See CRS Report RS21951, Financing the U.S. Trade Deficit: Role of Foreign Governments, by Marc Labonte and
Gail E. Makinen.
7 See CRS Report RL33186, Is the U.S. Current Account Deficit Sustainable?, by Marc Labonte.
8 CRS Report RL31032, The U.S. Trade Deficit: Causes, Consequences, and Cures, by Craig K. Elwell.
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Since the financial turmoil began in August 2007, the supply of Treasury securities has risen
sharply, as a result of the increase in federal borrowing to finance spending on economic and
financial recovery.9 At the same time, the demand for Treasury securities has risen as there has
been a “flight to quality” caused by greater investor preference for Treasury securities compared
with riskier private securities. Thus, although an increase in the supply of Treasury securities
would be expected to cause Treasury yields to rise, they have instead fallen. Likewise, although
the financial turmoil originated in U.S. markets, after the turmoil deepened in September 2008,
net capital inflows pushed up the value of the dollar.
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CRS Report RS21409, The Budget Deficit and the Trade Deficit: What Is Their Relationship?, by
Marc Labonte and Gail E. Makinen.
CRS Report RL34314, China’s Holdings of U.S. Securities: Implications for the U.S. Economy,
by Wayne M. Morrison and Marc Labonte.
CRS Report RL31590, The Federal Government Debt: Its Size and Economic Significance, by
Brian W. Cashell.
CRS Report RL34319, Foreign Ownership of U.S. Financial Assets: Implications of a
Withdrawal, by James K. Jackson.
CRS Report RL33186, Is the U.S. Current Account Deficit Sustainable?, coordinated by Marc
Labonte.
CRS Report RL30520, The National Debt: Who Bears Its Burden?, by Marc Labonte and Gail E.
Makinen.
CRS Report RL31032, The U.S. Trade Deficit: Causes, Consequences, and Cures, by Craig K.
Elwell.
CRS Report RS21951, Financing the U.S. Trade Deficit: Role of Foreign Governments, by Marc
Labonte and Gail E. Makinen.
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Justin Murray
Marc Labonte
Information Research Specialist
Specialist in Macroeconomic Policy
jmurray@crs.loc.gov, 7-4092
mlabonte@crs.loc.gov, 7-0640
9 For details on the liquidity crisis in financial markets starting in August 2007, see CRS Report RL34182, Financial
Crisis? The Liquidity Crunch of August 2007, by Darryl E. Getter et al.
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