This is a dry but useful article. If you can calm down and read it, you will have a clear understanding of the debt situation of the United States.
Over the past decade, U.S. government debt has grown faster than at any time since the end of World War II and outpaced economic growth during that period. At the end of 2019, the size of the US debt reached the highest level since the war.
At the end of 2019, the debt held by the public was $16.8 trillion, equivalent to 79% of US GDP, which is much higher than the average debt level of the past 50 years.
According to the Congressional Budget Office, by 2030, the scale of US debt will increase to 31.4 trillion US dollars, equivalent to 98% of US GDP. Such a large and growing debt scale will significantly affect the US economy and government budget.
(1) What is publicly held debt?
To finance government activities, bonds issued by the U.S. Treasury are collectively classified as debt held by the public. These bonds have different maturities, are sold to investors differently, and have different interest payment structures.
Marketable securities make up the vast majority of this debt, while illiquid bonds such as savings bonds make up the remainder. The Treasury Department usually uses primary dealers as intermediaries to sell bonds in the market to a variety of domestic buyers (such as the Federal Reserve, mutual funds, financial institutions, and individuals), overseas private investors, and central banks in other countries. U.S. domestic investors currently own about three-fifths of outstanding publicly held debt.
The budget deficit drives the scale of U.S. borrowing to grow year after year. As of the end of 2019, the federal debt held by the public was $16.8 trillion, equivalent to about 79% of GDP, higher than at any time since World War II.
Debt held by the public measures the extent to which U.S. government borrowing affects the ability of other borrowers to obtain private sector funding. All else being equal, an increase in government borrowing reduces the funds available to other borrowers, puts upward pressure on interest rates, and reduces private investment. It is the metric most commonly used by the Congressional Budget Office in its budget reports.
(2) Debt held by the public other than financial assets
Government spending includes not only spending on services or physical assets, such as real estate or military resources, but also purchases of financial assets. When the government issues bonds to acquire these assets, such as to finance student loans, its overall financial position remains largely unchanged, as does publicly held debt other than financial assets. If these assets are preserved, they generate dividends, interest payments, and principal repayments, reducing the government's need to borrow. If the government sells these financial assets, the proceeds can be used to repay part of the government's debt.
Publicly held debt other than financial assets still provides a more complete picture of the government's overall financial position than other indicators.
(3) Total debt
Another measure of the government's overall financial health is total debt, which includes debt held by the public, Treasury securities held in federal trust funds, and other government accounts.
The value of treasury bonds held among government agencies, the debt owed by the Treasury to these funds, reflects the excess of expenditures from these trust funds or accounts over accumulated revenues (eg, payroll taxes for Social Security and Medicare trust funds). amount, plus interest accrued on the excess.
However, the value of U.S. Treasury securities held among government agencies is not a valid indicator of the government's long-term liabilities for these programs.
(4) Debt within the statutory limit
Debt within the statutory limit is basically equal to total debt, and the size is usually limited by legal regulations: it is the maximum amount of national debt that the Treasury Department can issue to the public or other federal agencies.
The main difference between debt within the statutory limit and total debt is that the statutory limit excludes most debt issued by the Federal Financing Bank, a branch of the Treasury Department that can issue up to $15 billion of its own debt. Debt within limits also takes into account some adjustments excluded from total debt.
(5) Congressional Budget Office's projections for US debt in the next ten years
In CBO's projections, debt is projected to increase at a rate much faster than the rate of economic growth, assuming prevailing conditions for managing taxation and spending remain unchanged.
In the Congressional Budget Office's January 2020 projections, debt held by the public will reach $31.4 trillion (98% of GDP) in 2030. At that time, the debt scale will reach the highest level since 1946, which is more than double the average debt scale in the past 50 years.
According to Congressional Budget Office estimates, spending from the Social Security and Medicare trust funds is expected to outstrip income from those funds, so the increase in total debt will be the slowest, but debt growth, as measured by other measures, will still outpace economic growth. quick.
As a result, these funds are expected to redeem more Treasuries than they buy, reducing total debt.
Over time, the projected increase in debt could depress economic output and pose significant risks to the country's fiscal and economic prospects.
In addition, the resulting higher interest costs will increase payouts to holders of foreign debt, continually reducing incomes for U.S. households.
(6) Debt held by the public
I just gave a brief introduction to the public holding of debt, and I will describe it in detail next.
Most of the debt held by the public is bonds issued by the Treasury Department, which are used to raise cash for federal government activities and to repay the debt when the bonds mature.
Comparing the size of the debt to GDP provides an indication of the fiscal health of the U.S. government and its ability to service its debts.
The Congressional Budget Office usually publishes both the amount of debt held by the public and the debt-to-GDP ratio. The debt-to-GDP ratio reflects the relationship between the size of the debt and the size of the economy and helps measure the debt situation in different years.
The Treasury raises money from the public by selling securities on the market. Usually with the primary dealer as the intermediary, the securities buyers are various domestic buyers (such as the Federal Reserve, mutual funds, financial institutions and individuals), overseas private investors, and other national central banks, especially China and Japan.
The various types of securities issued by the Treasury differ in terms of maturity, how they are sold, and the structure of interest payments. These differences affect the level of interest rates and determine how much interest the government pays on outstanding debt.
The scale of government borrowing every year, that is, the new borrowing that the government must raise beyond the amount of debt repayment due, is largely determined by the size of the government budget. Other factors affecting borrowing, collectively referred to as other means of financing, are not reflected in the budget totals.
These factors include changes in government cash balances and cash flows from government programs that provide loans and loan guarantees. Less than 1 percent of publicly held debt is issued by other government agencies, such as the Tennessee Valley Authority. Debt issued by Fannie Mae and Freddie Mac, two government-backed housing businesses that are administered by the federal government, is also not included in publicly held debt.
1. The tendency of the public to hold debt
During World War II, the U.S. government borrowed heavily to finance defense spending. As of 1946, the debt held by the public reached 106% of GDP. Over the next few decades, however, the economy and inflation outpaced the outstanding debt, and the debt-to-GDP ratio fell steadily, to 23% by 1974.
Total debt grew slowly during this period, averaging a small increase of about $2 billion a year, from $242 billion in 1946 to $283 billion in 1970.
This trend ended in the 1970s. During this decade, the government budget was in the red, and the amount of debt held by the public more than doubled, to $712 billion in 1980. Since GDP also grew during this period, the debt-to-GDP ratio rose only marginally to 26% by 1980.
Between 1980 and 1993, lower incomes and higher spending relative to GDP resulted in an average deficit of nearly 4% of GDP, and public holdings of debt grew faster than nominal GDP: by 1993, Total debt reached $3.2 trillion, rising from 26 percent of GDP in 1980 to 48 percent in 1993.
This rate was maintained until 1997.
From 1998 to 2001, the United States experienced strong economic growth, with rapid increases in income and declines in spending relative to GDP. As a result, the U.S. government budget surplus over the past four years has reduced the debt held by the public by more than $450 billion to 32% of GDP, the lowest level since the early 1980s.
Between 2002 and 2007, the debt-to-GDP ratio was largely stable at around 35%; deficits boosted the public's holdings of debt by more than $1.7 trillion, but economic growth also boosted GDP substantially.
From 2007 to 2009, the United States experienced the worst financial crisis and recession since the Great Depression. In 2009, government revenue fell sharply while spending surged, pushing the deficit to $1.4 trillion, or 10% of GDP (the highest since 1945).
In 2010, the deficit was close to $1.3 trillion (9 percent of GDP) as incomes continued to decline relative to the size of the economy and spending increased. Total debt rose from 39 percent of GDP in 2008 to 70 percent by the end of 2012. Overall, between 2009 and 2012, the Treasury Department raised $5.5 trillion from the public, and the debt held by the public increased to $11.3 trillion.
From 2012 to 2019, the size of the debt increased by an average of 6% per year (compared to a nominal GDP growth rate of 4%). At the end of 2019, the public held federal debt equal to 79.2% of GDP, higher than at any time since the end of World War II. In 2019, the government's debt interest costs were as high as $404 billion.
2. The type and amount of debt held by the public
The Treasury finances government activities by issuing marketable and non-negotiable securities. Marketable securities are sold through regular auctions and can be resold.
At the end of 2019, the size of marketable securities was 16.3 trillion yuan, accounting for 97% of the debt held by the public (the dark part in the figure). Non-negotiable bonds are purchased directly without auction and cannot be traded in the secondary market.
At the end of 2019, the size of non-tradable bonds was US$486 billion, accounting for 3% of the debt held by the public (the light part in the figure).
(1) Securities
Treasury Bills, Treasury Notes, Long-Term Treasury Bills, Floating Rate Notes (FRNs), and Treasury Inflation-Protected Securities (TIPS) have maturities ranging from a few days to 30 years. Securities auctions are held periodically throughout the year. I will introduce it in detail next.
①Issuance of securities
The Ministry of Finance conducts periodic auctions of securities. In these auctions, the amount of each bond issued is determined by the federal government's borrowing needs. The auction schedule and tenor mix are selected to ensure liquidity, and investors can buy or sell these issues quickly, without causing price volatility for large transactions.
Tender bonds can be tendered or not tendered. Large financial institutions typically participate in competitive bidding for their own accounts or on behalf of their clients in the secondary market. The bid specifies how much each investor pays for the bond. The Treasury ranks the discount rates (for short-term Treasuries) or yields (for medium- and long-term Treasuries) it accepts in ascending order until the amount of accepted bids reaches the amount of bonds that can be sold. The winning bidder gets to buy the bond at the highest discount rate, or yield.
Some investors participate in non-competitive bidding through the Ministry of Finance, or through specific banks, brokers and dealers. Buyers specify the amount to buy but not the rate of return; their bids are guaranteed to be completed at the highest accepted rate of return.
② Short-term treasury bonds
The Ministry of Finance issues 1-month, 2-month, 3-month and 6-month short-term treasury bonds. The Treasury Department also conducts auctions of 1-year Treasury bonds every four weeks. As needed, the Treasury Department issues these cash management bonds to finance temporary cash shortages. The maturities of short-term Treasury bonds vary, but are usually no longer than three months. At the end of 2019, the face value of outstanding short-term Treasury bills was about $2.4 trillion, accounting for 15% of all marketable debt.
③ Medium-term treasury bonds
Over the past two decades, the Ministry of Finance has significantly changed the mix of medium-term treasury bonds. In early 2000, after several years of fiscal surpluses, the Ministry of Finance issued only 2-year, 5-year and 10-year treasury bonds.
In 2003, after 2 years of fiscal deficits, 3-year bonds were reissued.
In 2008, the Treasury Department reissued the 7-year Treasury note as debt continued to mount. The 10-year bond auction is held quarterly, along with additional 10-year notes previously issued. (In a follow-on issue, the Ministry of Finance issues an additional amount to the stock of previously issued bonds. The follow-on bond has the same term and interest rate as the original bond, but has a different issue date and usually a different price)
As of the end of 2019, outstanding medium-term treasury bonds were worth $9.8 trillion, accounting for 60% of all marketable debt.
④ Long-term treasury bonds
In 2001, the Treasury Department temporarily suspended the issuance of long-term government bonds, because the budget balance has improved in the past few years.
The hiatus ended in 2006 when the Treasury Department announced the reissue of the 30-year Treasury bond.
At present, long-term treasury bonds are issued quarterly, and there are additional issuances every month.
At the end of 2019, the size of long-term national debt outstanding was $2.3 trillion, accounting for about 14% of all marketable debt.
⑤ TIPS
TIPS was added to the auction program in 1997, initially with a term of 10 to 30 years.
The Ministry of Finance stopped issuing 30-year TIPS in 2001, began issuing 5-year and 20-year TIPS in 2004, and replaced 20-year TIPS with 30-year TIPS in 2010.
As of the end of 2019, outstanding TIPS totaled 1.5 trillion, accounting for about 9% of all marketable debt.
⑥FRN
In 2014, the Ministry of Finance introduced the FRN for a period of 2 years. The bonds are auctioned quarterly, though additional issuances of recent issues are made monthly.
At the end of fiscal 2019, outstanding FRN totaled $424 billion, accounting for only 3% of all marketable debt.
Short-term treasury bonds usually have a term of one year or less and are issued at a discount. Buyers pay less than face value and receive their face value at maturity.
Medium- and long-term treasury bonds are "interest-paying" bonds: when the bonds are issued, the interest level (coupon) paid every six months is set, and the purchaser gets back the principal when it matures. The maturity of medium-term treasury bonds ranges from 2 years to 10 years.
Long-term Treasury bonds have a maturity of 30 years.
The FRN has a 2-year maturity and its quarterly coupon payments are based on the prevailing interest rate on 13-week T-bills.
TIPS is different from other government bonds, its principal is adjusted every six months with the inflation rate. The interest rate is fixed at the auction, but the coupon payment varies because the rate is applied to the inflation-adjusted principal. Since the bond's value rises with inflation, TIPS reduce the risk for investors that inflation is higher than investors expect.
Since the late 1990s, medium-term treasury bonds have accounted for more than half of the outstanding marketable securities, reaching a peak of 67% in 2013.
Before 2010, short-term Treasury bills accounted for 20% to 30% of securities.
After 2010, the Ministry of Finance began to reduce the issuance of short-term instruments.
In 2015, short-term Treasury bills accounted for 11 percent of securities, before rising back to 15 percent in 2019.
At the end of 2019, long-term Treasuries accounted for 14% of the Treasury's outstanding marketable securities, about the same share as it has been since the late 1990s.
First issued in 1997, TIPS experienced initial growth until 2004, and since then have generally remained between 7% and 10% of outstanding securities. As of the end of 2019, FRN launched in 2014 accounted for only 3%.
The Treasury Department considers several factors when selecting the portfolio of bonds to issue to the public. Investor preferences and needs must be taken into account: issuing bonds that best meet investor needs will lower the Treasury's overall borrowing costs.
Short-term instruments typically have lower interest costs, but the government risks paying higher rates when it refinances these bonds. Conversely, long-term bonds typically have higher linkage costs, but since they don't need to be refinanced as often, there is more certainty about future interest payment costs.
In late 2008, the average remaining maturity of all securities fell to about 4 years as short-term Treasury borrowing, which had increased at the onset of the recession, continued during the ensuing financial crisis.
Since then, even as the Treasury has increased its share of long-term national debt, interest rates have remained historically low, with the Treasury paying an average of 2.4% in 2019 to service the nation's debt. The average maturity of bonds stretched to nearly six years at the end of 2019, the longest since 2001.
(2) Non-negotiable securities
Non-negotiable securities cannot be traded in secondary markets. Savings bonds, state and local government bonds (SLGS), and bonds issued to the federal government's Thrift Savings Program accounted for the largest share of the outstanding share; domestic and foreign zero-coupon bonds and other bonds accounted for a small amount. Unlike marketable securities, which are closely related to the size of the federal deficit, illiquid securities are issued based on investor demand.
① Savings bonds
First issued in 1935, savings bonds became popular during World War II as a way for the public to help increase defense spending. Several series are now issued with different characteristics, and these bonds are often purchased by individual investors as gifts or through payroll deductions.
As of the end of 2019, there were $152 billion in outstanding savings bonds. (This includes $26 billion in non-interest-bearing mature savings bonds.)
EE/E bonds. Since its inception in 1980, Series EE bonds have undergone several changes. Bonds purchased since May 2005 earn monthly interest, compounded semi-annually, for periods of up to 30 years. Series EE bonds typically do not pay interest, but Treasury-guaranteed bonds will at least double in face value 20 years after issuance. The face value of outstanding EE bonds (and their predecessor E bonds) has steadily decreased: outstanding bonds totaled $78 billion at the end of 2019, down $11 billion from 2 years ago.
other savings bonds. The Treasury Department also issues Series I bonds, inflation-indexed savings bonds. About $46 billion of I bonds were outstanding at the end of 2019, a level that has remained steady over the years. Series HH/H bonds, which pay cash coupons to bondholders semi-annually, were discontinued in 2004. At the end of 2019, Series HH/H bonds had a total face value of $3 billion.
②State and local government bonds
The Treasury Department issues a series of state and local government bonds under its tax incentives for the government. This incentive allows states and municipalities to issue tax-exempt bonds, which often pay lower interest rates than taxable bonds, such as U.S. Treasury or corporate bonds.
In the absence of provisions to the contrary, issuers of tax-exempt bonds have an incentive to borrow money at a tax-free rate and reinvest the money in higher-interest-rate but taxable assets to make a profit, a practice known as tax arbitrage.
To avoid that, U.S. law allows state and local governments to borrow only for legitimate public purposes, such as financing infrastructure projects. During the period after the project is confirmed and before the official launch, the borrowed funds may be idle. In order to avoid violating tax arbitrage regulations, the issuer can invest in SLGS bonds. (The yield, or rate of return, on these bonds is capped at one basis point below the yield on Treasuries of the same maturity; a basis point is one-hundredth of 1 percent.)
The Treasury Department also allows state and local governments to deposit funds into demand deposit accounts with depository institutions (demand deposits, where funds can be withdrawn at any time without notifying the depository institution). Interest on these deposits is accrued daily at the yield of the most recent auctioned 3-month treasury bond.
In the decade following the recession, demand for SLGS bonds fell sharply as interest rates remained low and local governments refinanced smaller amounts of existing debt.
In addition, the primary tax law enacted in 2017, Public Law 115-97, removed tax incentives for state and local governments, further reducing the attractiveness of SLGS bonds to investors.
In 2007, the face value of outstanding SLGS bonds peaked at nearly $300 billion; by the end of 2019, the outstanding face value had fallen by 80% to $54 billion.
③ Thrift Savings Plan
The retirement savings plan for federal employees and members of the military is similar to the private sector's 401(k) plan, which allows federal employees to invest in funds that track financial assets, including domestic and foreign stocks, fixed-income securities and U.S. government securities.
Government securities are non-tradable securities issued by the Treasury Department especially for the Thrift Savings Plan's G Fund. Although their maturities are only one day, their interest is equal to the average market yield on outstanding marketable government bonds with remaining maturities of 4 years and above. As of the end of 2019, G Fund securities totaled $243 billion.
④ Zero-coupon bonds and other non-negotiable securities
In the 1980s, the government issued a series of zero-coupon bonds with a maturity of 30 years and a total face value of $30 billion.
The bonds were issued for government-backed restructuring finance companies as part of a plan to address the savings and loan crisis of the 1980s and 1990s.
The first tranche of bonds matured in October 2019. As of September 2019, the federal government still held approximately $2 billion in non-negotiable securities in many other small accounts.
3. Borrowing that is not used to finance the fiscal deficit
In a given fiscal year, the amount the Treasury borrows or redeems depends largely on the budget deficit or surplus. Other factors, such as other means of financing not directly included in the budget totals, also affect the need to borrow from the public. From 2005 to 2019, these other means of financing resulted in Treasury borrowing in excess of the accumulated fiscal deficit by approximately $1.6 trillion, primarily related to direct lending to higher education students and a net increase in Treasury’s cash balance.
(1) Financing government loans
Unlike covering the government deficit, the cumulative effect of borrowing is primarily driven by federal credit programs. The Treasury borrows from the public to fund its lending programs; net borrowing is subsequently reduced by the amount of principal and interest received.
Under the Federal Credit Reform Act of 1990, the cash flows of most government loans to the public are not recorded in the federal budget at the time of the transaction, when the payment or receipt occurs. Instead, the budget shows the net subsidy costs (costs expected over the life of the loan or loan guarantee) associated with these activities, which will be included in the budget when the loan or loan guarantee is finalized.
Such a treatment creates a disconnect between the budget and Treasury borrowing, as borrowing needs are determined by the cash flows from these transactions. For example, with direct lending, the amount the government has to borrow is usually greater than the costs recorded in the budget. For a loan program with a subsidy rate of 10%, the government may disburse a $1,000 cash loan and receive cash repayments later, but the $100 cost is budgeted when the loan is disbursed and is not recorded for years to come (unless estimated subsidy rate proved to be incorrect).
To align these transactions with projected budgetary costs, the government uses an off-budget "credit financing account" that credits subsidy amounts shown in the budget.
These accounts record all cash flows associated with the project. If the funding account requires cash upfront (for example, to pay a direct loan), it borrows money from the Treasury, which in turn borrows from the public by issuing securities. In 2019, these financing accounts borrowed more than $70 billion and collectively held $1.4 trillion in U.S. Treasury securities.
Federal government lending to higher education accounts for the majority of government loan spending; in 2011, the Treasury Department borrowed $152 billion for these loans. (Before 2010, the Education Department largely guaranteed loans to the private sector.) However, as loans have been repaid, net borrowing has dropped to below $50 billion a year.
As of the end of fiscal year 2019, outstanding education loans totaled $1.2 trillion, or 87 percent of total federal credit program debt.
(2) Changes in cash balance
The Treasury maintains a cash balance, which ebbs and flows with daily receipts and payments, to handle day-to-day transactions and ensure it has the capacity to meet emergency funding needs.
Over the past six years, the average daily balance has been around $270 billion; at the end of 2019, it was $382 billion.
If the Treasury holds more or less cash balances on the last day of a fiscal year than on the last day of the previous year, the cash balances can cause significant year-to-year changes in other forms of financing.
For example, during 2017, the Treasury used the cash it held to pay debts, but it was unable to fully cover those debt balances due to the debt ceiling at the end of the year. (See Chapter 2 for a more detailed discussion of the debt ceiling and its implications.) However, in 2018, the Treasury borrowed $225 billion to boost its cash balances beyond what was needed to finance the deficit, leading to public holdings of The debt has increased by the same amount.
(3) Other Factors Affecting Federal Borrowing
Increases or decreases in government borrowing depend on changes in the amount of debt issued by other federal agencies, the amount of outstanding checks and unpaid accrued interest costs, and the limits of the debt ceiling. (Unlike most other costs in the budget, interest costs are recorded as an expense when incurred, not paid.)
Most of the $21 billion in non-Treasury debt held by the public at the end of 2019 was issued by the Tennessee Valley Authority. Other institutions issued smaller amounts. When institutions issue debt in their own name, the Treasury does not need to borrow money for them.
The debt ceiling affects the amount of outstanding debt. For example, in March 2015, the temporary suspension of the debt ceiling expired, and the restored debt ceiling was set at the amount of outstanding debt at that time. To manage the government's cash needs amid constrained net borrowing, the Treasury took extraordinary measures, including reducing its holdings of day securities held by the TSP's G Fund and the Exchange Stabilization Fund.
As of the end of September 2015, with the impasse still unresolved, the $200 billion reduction in securities was included in an accounting adjustment, reducing the accounting for other means of financing. In October 2015, when the debt ceiling was again suspended and the Treasury Department was free to resume normal operations, the funds were reinvested and an accounting adjustment of $200 billion was reversed. This amount, plus interest, was added to the rest of the 2016 means of financing.
4. Ownership of Federal Debt Held by the Public
Investors view government debt as an attractive investment because it is widely viewed as having no risk of default. The value of U.S. Treasury bonds is also reflected in its liquidity, that is, it can be bought and sold quickly and in large quantities without affecting the price.
As of the end of September 2019, U.S. domestic investors held about $9.6 trillion in U.S. Treasury bonds, accounting for 59% of the outstanding publicly held debt; foreign investors held about $6.6 trillion, accounting for 41%.
(1) Domestic ownership
Between 2009 and 2019, domestic holdings of U.S. Treasuries increased substantially, from roughly $4.0 trillion to $9.6 trillion.
At the end of 2019, the Fed held $2.1 trillion, about 13% of the total, more than any other single entity. Ten years ago, the Fed held $0.8 trillion, or about 10% of the debt held by the public.
Much of the increase was due to the Federal Reserve's decision to buy assets on a large scale, which put downward pressure on yield levels during and after the 2007-2009 recession.
Other major holders include mutual funds, financial institutions, pension and retirement funds, and state and local governments.
Between 2009 and 2019, mutual fund holdings rose from $0.7 trillion to $1.9 trillion, or 12 percent.
Holdings by financial institutions and pension funds also rose over the period, with the share of outstanding debt held by each category rising to 6 per cent. While the total amount of U.S. Treasury debt held by state and local governments has increased, it has not increased as fast as the debt has grown.
As a result, the state and local share fell from 8 percent in 2009 to 4 percent in 2019. In 2019, other investors (including individuals, individual trusts and companies, etc.) held US treasury bonds of US$3.0 trillion, accounting for about 18% of the total, an increase of 2 percentage points from 10 years ago.
(2) Foreign Ownership
From 2009 to 2019, foreign investor holdings of U.S. debt increased substantially, from $3.6 trillion in 2009 to $6.6 trillion in 2019. But the share of debt held abroad fell from 47 percent to 41 percent.
At the end of 2019, the 10 countries with the largest holdings of U.S. Treasuries were Japan, China, the United Kingdom, Brazil, Ireland, Luxembourg, Switzerland, the Cayman Islands, Hong Kong and Belgium. (Information regarding foreign holders of U.S. Treasury securities is approximate only.) Securities are not necessarily held by citizens of the countries listed above.
In some cases, ownership is recorded under an institution registered in the country, but the owner lives elsewhere, often for tax purposes.
Overall, private entities in China and Japan, as well as the central banks of these countries, are the largest foreign investors. At the end of 2019, these concerns held $2.2 trillion in U.S. Treasury securities, or 14% of outstanding debt held by the public.
In 2019, Chinese and Japanese entities held almost a third more dollar-denominated debt than in 2009, but the share of total debt held by these entities declined. The largest increase in foreign holdings actually came from countries other than these 10 countries.
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