Foreign Holdings of Federal Debt

November 23, 2005 – June 18, 2024 RS22331

Foreign Holdings of Federal Debt
Updated June 18, 2024
Congressional Research Service
https://crsreports.congress.gov
RS22331

Foreign Holdings of Federal Debt

Summary
This report presents current data on ownership of U.S. Treasury securities and major holders of
federal debt by country. Federal debt represents the accumulated balance of borrowing by the
federal government. The gross debt is composed of debt held by the public and intragovernmental
debt held by federal trust funds. To finance the publicly held debt, 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; the Federal Reserve; financial institutions in the
United States or overseas; and foreign, state, or local governments.
As of December 2023, there was $26.2 trillion of Treasury securities outstanding, up from $16.6
trillion in December 2019, a $9.6 trillion increase (figures are rounded). During the same period,
foreign holdings of debt increased by $1.1 trillion to a total of approximately $8.1 trillion. After
staying relatively flat in dollar terms for several years, overall foreign holdings increased in 2019-
2021, fell in 2022, then jumped in 2023. Because the total debt has increased faster than the debt
held by foreigners, the share of federal debt held by foreigners has declined in recent years. In
December 2023, foreigners held 31% of the publicly held debt. Interest on the debt paid to
foreigners in 2023 was $197.5 billion.
Foreign holdings can be divided into official (governmental investment) and private sources:
47.7% ($3.8 trillion) of foreign holdings in U.S. federal debt are held by governmental sources,
and private investors hold the other 52.3% ($4.2 trillion).
Including private investors and governments, the top three estimated foreign holders of federal
debt by country, as of December 2023, are Japan ($1.1 trillion), China ($0.8 trillion), and the
United Kingdom ($0.7 trillion). Based on these estimates, Japan holds approximately 14.3% of all
foreign investment in U.S. publicly held federal debt, China holds approximately 10.3%, and the
United Kingdom holds approximately 8.5%.
From an economic perspective, foreign holdings of federal debt can be viewed in the broader
context of U.S. savings, investment, and borrowing from abroad. For decades, the United States
has saved less than it invests. Domestic saving is composed of saving by U.S. households,
businesses, and governments. By accounting identity, when the government runs budget deficits,
it reduces domestic saving. By the same accounting identity, the shortfall between U.S. saving
and physical investment is met by borrowing from abroad. To be a net borrower from abroad, the
United States must run a trade deficit (i.e., it must buy more imports from foreigners than it sells
in exports to foreigners). Borrowing from abroad has occurred through foreign purchases of both
U.S. government and U.S. private securities and other assets.
As a result of foreign purchases of Treasury securities, the federal government must send U.S.
income abroad to foreigners. If the overall economy is larger as a result of federal borrowing
(because the borrowing stimulated economic recovery or was used to productively add to the U.S.
capital stock, for example), then this outcome may leave the United States better off overall on
net despite the transfer of income abroad. In other words, without foreign borrowing, U.S. income
would be lower than it currently is net of foreign interest payments in this scenario.

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Selected Statistics on Foreign Holdings of
Federal Debt
Federal debt represents, in large measure, the accumulated balance of federal borrowing of the
U.S. government. The gross debt is composed of debt held by the public and intragovernmental
debt held by federal trust funds. Although gross federal debt is the broadest measure of the debt,
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. Intragovernmental debt, by contrast, is both an asset and a liability
to the federal government.
The portion of gross federal debt held by the public consists primarily of investment in
marketable U.S. Treasury securities (i.e., bills, bonds, and notes traded in private markets).1
Investors in the United States and abroad include official institutions, such as the U.S. Federal
Reserve and foreign central banks; financial institutions, such as commercial banks; and private
individual investors.
Table 1 provides December 2019 through December 2023 data, available as of June 2024, on
estimated ownership of U.S. Treasury securities by type of investment and the percentage of that
investment attributable to foreign investors.2
The table shows that during this period, foreign holdings of debt increased by $1.1 trillion to
approximately $8.1 trillion. After staying relatively flat in dollar terms for several years, overall
foreign holdings increased in 2019-2021, fell in 2022, and then jumped in 2023. During the same
period, total publicly held debt increased by approximately $9.6 trillion from $16.6 trillion to
$26.2 trillion.3 Because the total debt has increased faster than the debt held by foreigners, the
share of federal debt held by foreigners has declined in recent years. In December 2023,
foreigners held 31% of the publicly held debt.4 Interest on the debt paid to foreigners in 2023 was
$197.5 billion.5

1 Current data on federal debt held by the public are available on the Department of the Treasury’s Fiscal Data website,
“The Debt to the Penny,” https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/debt-to-the-penny. See CRS Report
R44383, Deficits, Debt, and the Economy: An Introduction, by Grant A. Driessen.
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 “Portfolio Holdings of U.S. and Foreign Securities,”
https://home.treasury.gov/data/treasury-international-capital-tic-system-home-page/tic-forms-instructions/securities-b-
portfolio-holdings-of-us-and-foreign-securities, produced by the Treasury Department International Capital System.
3 Figures are rounded.
4 Data are excerpted from the Board of Governors of the Federal Reserve System’s flow of funds data, Table L.210 in
Financial Accounts of the United States (Z.1). A small amount of publicly held debt is nonmarketable and includes
savings bonds and debt issued to state and local governments.
5 Bureau of Economic Analysis (BEA), International Transactions, Table 4.3, line 39. No data are available for interest
on the debt paid to individual countries.
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Table 1. Estimated Ownership of U.S. Treasury Securities (2019-2023)
(in trillions of dollars)
End of
Foreign Holdings as a
Month
Total Debt
Foreign Holdings
Share of Total Debt
Dec. 2023
$26.2
$8.1
31%
Dec. 2022
$23.8
$7.3
31%
Dec. 2021
$22.6
$7.7
34%
Dec. 2020
$20.9
$7.3
35%
Dec. 2019
$16.6
$6.9
42%
Source: Board of Governors of the Federal Reserve System, Financial Accounts of the United States (Z.1), Table
L.210 (Treasury Securities), via Data Download Program at https://www.federalreserve.gov/datadownload.
Notes: Table includes marketable Treasury securities held by the public. Data current as of June 10, 2024.
Figure 1 shows the foreign share of total Treasury securities outstanding over time since 1945.
Figure 1. Foreign and Domestic Holdings of Treasury Securities (1945-2023)
Figure is interactive in the HTML version of this report.

Source: Created by CRS. Data from Board of Governors of the Federal Reserve System, Financial Accounts of
the United States (Z.1), Table L.210 (Treasury Securities), via Data Download Program at
https://www.federalreserve.gov/datadownload.
Notes: Table includes marketable Treasury securities held by the public. Data current as of June 10, 2024.
Table 2 provides data on major foreign holders of federal debt by country.6 The top three
estimated foreign holders of federal debt by country, ranked in descending order as of December
2023, are Japan ($1.1 trillion), China ($0.8 trillion), and the United Kingdom ($0.7 trillion).
Based on these estimates, Japan holds approximately 14.3% of all foreign investment in U.S.

6 A Chinese investor who buys U.S. securities and keeps them in the custody of a Belgian bank would have those assets
counted under Belgium, not Mainland China. This helps explain why such large holdings appear in major banking hubs
(e.g., Belgium, Caribbean countries, Luxembourg, Switzerland).
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privately held federal debt, China holds approximately 10.3%, and the United Kingdom holds
approximately 8.5%.7 While China remains a large holder of federal debt, its holdings have fallen
in both nominal terms and as a share of total foreign holdings.
Table 2. Top 10 Foreign Holders of Federal Debt, by Country

December 2023

December 2019
Percentage of
Percentage of
All Foreign
All Foreign
Amount Held
Holdings in
Amount Held
Holdings in
Country
($ billions)
Federal Debt
Country
($ billions)
Federal Debt
Japan
$1,136.7
14.30%
Japan
$1,155.2
16.88%
Mainland China
$816.3
10.27%
Mainland China
$1,069.9
15.63%
United Kingdom
$679.2
8.55%
United Kingdom
$392.1
5.73%
Luxembourg
$370.7
4.66%
Ireland
$281.9
4.12%
Canada
$336.1
4.23%
Brazil
$281.8
4.12%
Ireland
$331.5
4.17%
Luxembourg
$254.6
3.72%
Belgium
$314.4
3.96%
Hong Kong
$249.7
3.65%
Cayman Islands
$305.4
3.84%
Cayman Islands
$238.2
3.48%
Switzerland
$287.9
3.62%
Switzerland
$237.5
3.47%
Taiwan
$252.5
3.18%
Belgium
$207.4
3.03%
Total top 10

Total top 10
countries of
countries of
foreign investors
$4,830.7
60.8%
foreign investors
$4,368.3
63.8%
in federal debt
in federal debt
Total all foreign

Total all foreign
investment in
$7,946.5
100%
investment in
$6,844.2
100%
federal debt
federal debt
Source: Treasury Department International Capital System (TIC), https://www.treasury.gov/resource-center/
data-chart-center/tic/Documents/mfhhis01.txt.
Notes: Data, including estimated foreign holders of federal debt historically by month, in these Treasury
Department tables are periodically adjusted. Aggregate data totals in Table 1 vary slightly from aggregate data
totals in Table 2 because of minor technical differences between the two sources. Percentage approximations
calculated by CRS. Percentages may not sum to 100% due to rounding. Data current as of June 10, 2024.
Figure 2 shows the changing composition of foreign holdings over time since 2002.

7 The Treasury Department estimates foreign holdings based on the location of the holdings, not the nationality of the
holder.
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Figure 2. Composition of Foreign Holdings of U.S. Treasury Securities (2002-2023)
Figure is interactive in the HTML version of this report.

Source: Created by CRS. Data from U.S. Department of the Treasury, Treasury International Capital (TIC)
System, at https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfhhis01.txt.
Notes: The Treasury Department’s data track the location of an asset, not its owner’s nationality. Not all
countries have data for all years. “All Other” may not represent the same countries in each year. After 2011, the
“Caribbean Banking Centers” and “Oil Exporters” groups are replaced by individual countries. Data current as of
June 10, 2024.

Foreign holdings can be divided into official (government/central bank) and private sources.
Figure 3 provides data on the current breakdown of estimated foreign holdings in U.S. federal
debt. As the chart shows, governmental sources hold 47.7% ($3.8 trillion) of foreign holdings in
U.S. federal debt. Private investors hold the other 52.3% ($4.2 trillion). The breakdown between
estimated official and private holdings is not publicly available on a country-by-country basis.
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Figure 3. Breakdown of Official Versus Private Foreign Holdings of U.S. Federal Debt
December 2023

Source: Created by CRS. Data from U.S. Department of the Treasury, Treasury International Capital (TIC)
System, https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfhhis01.txt.
Notes: Approximate percentages calculated by CRS. Data current as of June 10, 2024.
Foreign Investment in U.S. Federal Debt:
Why Is It an Issue of Concern?
From an economic perspective, foreign holdings of federal debt can be viewed in the broader
context of U.S. saving, investment, and borrowing from abroad. For decades, the United States
has saved less than it invests. Domestic saving is composed of saving by U.S. households,
businesses, and governments. By accounting identity,8 when the government runs budget deficits,
it reduces domestic saving. By the same accounting identity, the shortfall between U.S. saving
and physical investment is met by borrowing from abroad. When the deficit rises (i.e., public
saving falls), U.S. investment must fall (referred to as the deficit crowding out investment) or
borrowing from abroad must rise. If capital were fully mobile and unlimited, a larger deficit
would be fully matched by greater borrowing from abroad, and there would be no crowding out
of domestic investment.
By accounting identity, to be a net borrower from abroad, the United States must run a current
account deficit. The trade deficit is the largest component of the current account deficit.9 In other
words, to be a net borrower, the United States must buy more imports from foreigners than it sells
in exports to foreigners. Since 2000, U.S. borrowing from abroad and the trade deficit have each
exceeded $300 billion each year. Borrowing from abroad equaled $832 billion in 2023, down
from a high of $976 billion in 2022.10 Borrowing from abroad has occurred through foreign
purchases of both U.S. government and U.S. private securities and other assets.11
As a result of foreign purchases of Treasury securities, the federal government must send U.S.
income abroad to foreigners. If the overall economy is larger as a result of federal borrowing

8 The accounting identity is (household saving + business saving + government saving) + (borrowing from abroad -
lending to abroad) = (public investment + private investment).
9 The current account also includes net income and transfer payments made by the United States.
10 BEA, U.S. International Transactions, Table 1.2, line 116.
11 For more information, see CRS In Focus IF10619, The U.S. Trade Deficit: An Overview, by Andres B.
Schwarzenberg.
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(because the borrowing stimulated economic recovery12 or was used to productively add to the
U.S. capital stock, for example), then this outcome may leave the United States better off overall
on net despite the transfer of income abroad. In other words, without foreign borrowing, U.S.
income would be lower than it currently is net of foreign interest payments in this scenario.
It can be argued that the underlying long-term economic issue is the budget deficit itself and not
that the deficit is financed in part by foreigners. This can be illustrated by the counterfactual.
Assume the same budget deficits and U.S. saving rates without the possibility of foreign
borrowing. In this case, budget deficits would have had a much greater crowding-out effect on
U.S. private investment, because only domestic saving would have been available to finance both.
The pressures the deficit has placed on domestic saving would have pushed up interest rates
throughout the economy and caused fewer private investment projects to be profitably
undertaken. With fewer private investment projects, overall GDP would have been lower over
time relative to what it would have been. The ability to borrow from foreigners avoids the
deleterious effects on U.S. interest rates, private investment, and GDP, to an extent, even if it
means that the returns on some of this investment now flow to foreigners instead of Americans. In
other words, all else equal, foreign purchases of Treasury securities reduce the federal
government’s borrowing costs and reduce the costs the deficit imposes on the broader economy.
The burden of a foreign-financed deficit is borne by exporters and import-competing businesses,
because borrowing from abroad necessitates a trade deficit. It is also borne by future generations,
because future interest payments will require income transfers to foreigners.13 To the extent that
the deficit crowds out private investment rather than being financed through foreign borrowing,
its burden is also borne by future generations through an otherwise smaller GDP. As interest rates
have increased in recent years, interest paid on Treasury securities (to both Americans and
foreigners)14 has risen rapidly. If rates do not fall, the burden will continue to rise as old debt
matures and is rolled over into new debt instruments with higher rates.
Thus far, this report has considered the impact of the government’s budget deficit and the low
U.S. saving rate on U.S. Treasury yields but not investor demand. Since interest rates fell to
historic lows at a time when the supply of Treasury securities rose to historic heights, it follows
that Treasury rates have been driven mainly by increased investor demand in recent years. In the
wake of the 2008 financial crisis and again during the COVID-19 pandemic, investor demand for
Treasury securities increased as investors undertook a flight to safety. Treasury securities are
perceived as a safe haven compared with other assets because of low perceived default risk and
greater liquidity (i.e., the ability to sell quickly and at low cost) than virtually any alternative
asset. For foreign investors, their behavior also implies that they view the risk from exchange rate
changes of holding dollar-denominated assets to be lower than alternative assets denominated in
other currencies. The reasons for this flight to safety are varied. For example, investors who had
previously held more risky assets may become more averse to risk and seek to minimize their loss
exposure; investors may not see profitable private investment opportunities and choose to hold
their wealth in Treasury securities as a store of value until those opportunities arise; or investors
may need Treasury securities to post as collateral for certain types of transactions (such as

12 For a discussion of how government deficits can stimulate the economy, see CRS Report R45723, Fiscal Policy:
Economic Effects, by Lida R. Weinstock.
13 See CRS Report RL30520, The National Debt: Who Bears Its Burden?, by Marc Labonte. Income transfers to
domestic debt holders have no net cost on the United States because they transfer income from one group of Americans
(taxpayers) to another (bond holders).
14 Bureau of Economic Analysis (BEA), International Transactions, Table 4.3, line 39.
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repurchase agreements) where previously other types of collateral could be used (or used at low
cost).
Flight-to-safety considerations have subsided as economic conditions have normalized, reducing
the incentive for foreigners to buy Treasuries and raising their yields, all else equal. But Treasury
securities are also sought out by international investors because of the dollar’s unique role as the
world’s reserve currency. As a result, Treasury securities are in permanent demand as underlying
collateral in financial transactions and as a temporary store of value while trade or financial
transactions are being executed. Treasury securities may also be relatively attractive compared to
other government’s bonds because, for a variety of reasons, Treasury yields tend to be slightly
higher, when adjusted for risk.
More normal economic conditions have also increased domestic investment demand, which has
both pushed up domestic interest rates and lead to more foreign borrowing. This relative
movement in rates could attract additional foreign capital inflows.
Additionally, any discussion of foreign holdings of Treasuries would be incomplete without a
discussion of the large holdings of foreign governments (referred to as foreign official holdings in
Figure 3).15 Foreign official holdings are motivated primarily by a desire for a liquid and stable
store of value for foreign reserves. Relatively few assets besides U.S. Treasury securities fill this
role well. Depending on the country, foreign reserves may be accumulated as a result of a
country’s exchange rate policy, the desire to reinvest export proceeds, or the desire to build a war
chest to fend off speculation against the country’s exchange rate and securities. If motivated by
any of these factors, rate of return may be a lesser consideration for foreign governments than it is
for a private investor, although large, foreign official holdings have not been significantly
increasing since 2013—and peaked in 2020—after more than a decade of rapid growth before
then.
Since 1986, the United States has had a net foreign debt, and that debt was roughly $19.8 trillion
in 2023.16 Additional growth in net foreign debt would be unsustainable in the long run if it grows
faster than GDP, as it has generally done in recent decades. This net foreign debt has not imposed
any burden on Americans thus far, however, because the United States has consistently earned
more income on its foreign assets than it has paid on its foreign debt, even though foreigners
owned more U.S. assets than Americans owned foreign assets. Although it is likely that the
United States would begin to make net debt payments to foreigners at some point if the net
foreign debt were to continue to grow, it has not occurred yet. To date, the primary drawback is
the risk that its unsustainable growth poses, although that risk is slight in the short run.
Unsustainable growth in the net foreign debt could lead to foreigners at some point reevaluating
and reducing their U.S. asset holdings. If this happened suddenly, it could lead to financial
instability and a sharp decline in the dollar’s value. Alternatively, were the growth in the debt to
decline gradually, it is unlikely to be destabilizing.17

15 Department of the Treasury, Major Foreign Holders of Treasury Securities, http://www.treasury.gov/resource-
center/data-chart-center/tic/Documents/mfh.txt.
16 BEA, U.S. International Investment Position, Table 1.1, Line 1. The net foreign debt is the difference in value
between the foreign assets and foreign liabilities of U.S. residents.
17 The “safe haven” role of Treasuries and “reserve currency” role of the dollar have led to counterintuitive outcomes—
lower Treasury yields in response to U.S. events with systemic risk potential, such as the subprime mortgage crisis and
the federal debt downgrade. These counterintuitive outcomes make it even harder to accurately predict when the debt
might become unsustainable and perhaps make a destabilizing reversal of capital flows less likely compared with other
countries.
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A related concern is whether the major role of foreigners in Treasury markets adds more risk to
financial stability. In other words, would financial stability be less at risk if the United States
borrowed the same amount from foreigners, but foreigners invested exclusively in private
securities instead of U.S. Treasury securities? Empirical evidence does not shed much light on
this question, although the fact that some foreign countries that experienced debt crises, such as
Ireland, had accumulated mainly private, not government, debts might suggest that avoiding
foreign ownership of government debt is not a panacea. Although countries such as Greece with
large foreign holdings of government debt have experienced financing problems, a large share of
Italy’s large government debt was held domestically, and it has nevertheless faced financing
problems. The major role of foreign governments as holders of U.S. Treasuries could reduce
financial instability if foreign governments are less motivated by rate-of-return concerns, because
that implies they would be less likely to sell their holdings if prices started to fall. Finally, foreign
official holdings of U.S. debt may have foreign policy (as opposed to economic) implications that
are beyond the scope of this report.
What policy options exist if policymakers decided foreign ownership of federal debt is
undesirable? Absent strict capital controls, it is unlikely that foreigners could effectively be
prevented from buying Treasury securities. After Treasury securities are initially auctioned by
Treasury, they are traded on diffused and international secondary markets, and turnover is much
higher on secondary markets than on initial auctions. A foreign ban on secondary markets would
be hard to enforce because secondary market activity could shift overseas, and even if it could be
enforced, the U.S. saving-investment imbalance would likely shift foreign investment into other
U.S. securities—perhaps even newly created financial products that allowed foreigners to
indirectly invest in Treasury securities. Thus, a ban would not address the underlying economic
factors driving foreign purchases. Economically, the only way the U.S. government could reduce
its reliance on foreign borrowing is by raising the U.S. saving rate, which could be done most
directly by reducing budget deficits. Reducing deficits too quickly could be counterproductive,
however, if it undermined an economic recovery.

Author Information

Marc Labonte
Ben Leubsdorf
Specialist in Macroeconomic Policy
Research Librarian

Acknowledgments
Figures prepared by Amber Wilhelm, Visual Information Specialist. Senior Research Librarians Jared C.
Nagel and Justin Murray coauthored previous versions of this report.
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