Which foreign entities are major holders of U.S. debt?
The U.S. dollar is an international reserve currency. Most of the world’s official reserves are held in U.S. dollars. 6 Also, because of its relative safety, foreign investors (both government and private) may choose to hold assets denominated in dollars, such as U.S. Treasury securities, to diversify their portfolios. Central banks or other monetary authorities (often called “official” foreign entities) may hold foreign exchange reserves—such as dollars—in order to influence the value of their domestic currency in the foreign exchange market. 7 The Office of Management and Budget states that, at the end of 2005, “[f]oreign central banks owned 63 percent of the Federal debt held by foreign residents; private investors owned nearly all the rest”. 8 The official foreign holdings of specific countries is a “well-guarded secret,” 9 but overall foreign holdings (that is, official foreign holdings plus holdings from private foreign investors) are tracked by the Treasury, and are displayed in
