Who Has The Most Debt – Infographic: the countries that own the most u.s. debt, Russia′s default explained: will investors take a hit?, Fili genao (@filindg) / twitter, The global debt problem, World debt clocks, Emerging market banks’ government debt holdings pose financial stability risks
In fact, if you now hold a US Treasury bond or Treasury bill in your portfolio, you are already a debtor to the United States government.
And as you can see in today’s chart from HowMuch.net, foreign countries like China and Japan can also accumulate large positions in US Treasuries, making them major players in the overall US debt pie.
Who Has The Most Debt
As you can see, $8.1 trillion in debt is held by US government departments or the Federal Reserve. That number would include securities in federal employee retirement accounts, Social Security trust funds or any Treasuries on the Fed’s balance sheet.
Infographic: The Countries That Own The Most U.s. Debt
Additionally, another $7.6 trillion of debt is held by domestic investors. These are marketable securities held by banks, mutual funds, pension funds, insurance companies and other investors.
While domestic debt is often not an issue, the $6.3 trillion in debt held by foreign countries is a big question mark. After all, couldn’t a country like China “weaponize” large holdings of treasury securities in retaliation in an ongoing trade war?
China has been hoarding securities for decades as a strategy to prevent its domestic currency from appreciating. Interestingly, the export-heavy nation has reduced its holdings of government bonds in recent months, selling about $200 billion of them.
Although China has $1.11 trillion in government bond reserves, the general consensus is that dumping them all at once would destabilize the global financial system and have the same negative impact on China.
Chart: Debt To Gdp Continues To Rise Around The World
Is it any wonder that countries like China, Japan or Brazil are on the list of the largest holders of foreign debt, what about the Cayman Islands, Luxembourg or Ireland on the list?
First, although the Cayman Islands have a population of only 60,000, they are an equity hedge fund with over 10,000 funds based there. Luxembourg makes the list for similar reasons, it’s the European equivalent of a tax haven.
Ireland, on the other hand, is the overseas headquarters of many American technology giants, such as Facebook or Alphabet. These corporations apparently want to keep their foreign profits in highly liquid Treasuries instead of paying repatriation taxes to bring the cash back to American soil.
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Investor education Countries with the highest risk of default in 2022 In this infographic, we examine new data that ranks the top 25 countries based on their risk of default.
In May 2022, the South Asian nation of Sri Lanka defaulted on its debt for the first time. The country’s government was given a 30-day deadline to cover $78 million in unpaid interest, but ultimately defaulted.
Not only does this affect Sri Lanka’s economic future, but it also raises an important question: which other countries are at risk of insolvency?
Ukraine has a high risk of default due to the ongoing conflict with Russia. To understand why, consider a scenario where Russia were to take control of the country. If this happens, it is likely that Ukraine’s existing debt obligations will never be repaid.
Major Foreign Holders Of U.s. Treasury Securities 2022
This scenario triggered a sell-off in Ukrainian government bonds, pushing their value to around 30 cents to the dollar. This means that a bond with a face value of $100 can be purchased for $30.
Because yields move in the opposite direction to prices, the average yield on these bonds climbed to a very high 60.4%. By comparison, the yield on US 10-year Treasuries is currently 2.9%.
A credit default swap (CDS) is a type of derivative (financial contract) that provides credit with insurance against default. The CDS seller represents a third party between the lender (the investor) and the borrower (in this case governments).
In exchange for receiving coverage, CDS buyers pay a fee known as a spread, which is expressed in basis points (bps). If the CDS spread is 300 bps (3%), that means an investor has to pay $3 per year to insure $100 of debt.
Who Has The Highest Debt In The Eu?
Applying this to Ukraine’s 5-year CDS spread of 10,856 bps (108.56%), an investor would pay $108.56 each year to insure a $100 loan. This suggests that the market has very little confidence in Ukraine’s ability to avoid default.
Despite low scores on the two metrics discussed above, El Salvador ranks higher than Ukraine due to high interest costs and total government debt.
According to the statistics above, El Salvador has an annual interest payment of 4.9% of its GDP, which is quite a high amount. Compared to the US, US federal interest costs were 1.6% of GDP in 2020.
Overall, El Salvador’s outstanding debt is equal to 82.6% of GDP. This is considered high by historical standards, but is actually quite common today.
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Another date to watch will be January 2023, as that’s when the country’s $800 million government bond will mature. Recent research suggests that there would be significant but temporary negative impacts if El Salvador were to default.
In September 2021, El Salvador became the first country in the world to accept Bitcoin as legal tender. This means that Bitcoin is legally recognized as a means of settling debts and other obligations.
The International Monetary Fund (IMF) criticized the decision in early 2022 and called on the country to withdraw its legal tender status. In hindsight, these warnings were wise, as the price of Bitcoin has fallen 56% year-to-date.
Although not directly related to El Salvador’s default risk, it opens up potential avenues for relief. For example, big players in the crypto space may be willing to help governments keep the concept of “Bitcoin adoption in nation states” alive.
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Despite the effects of conflict and inflation, global growth continues. According to the IMF, world GDP will reach $104 trillion by the end of the year.
We covered this topic in the past when the world GDP was 88 trillion dollars (2020) and then 94 trillion dollars (2021), and now according to the latest estimates the IMF expects the world economy to reach a nominal value of about 104 trillion US dollars. . End of 2022.
Although growth is still on an upward trend, the expected recovery in the post-pandemic period appears strained. Due to recent conflicts, supply chain disruptions and subsequent inflation, global economic projections are being revised downwards.
Global annual GDP growth for 2022 was initially estimated at 4.4% in January, but was revised down to 3.6%.
Countries With The Highest And Lowest Household Debt
ℹ️ Gross domestic product (GDP) is a broad indicator of economic activity within a country. It measures the total value of economic output – goods and services – produced by both the private and public sectors in a given time frame.
The United States still leads the global economy with a GDP of $25.3 trillion, accounting for nearly a quarter of the global economy. China is approaching $19.9 trillion. Here’s a look at the top 50 countries by GDP:
Germany is first in Europe with $4.3 trillion, while the UK is second. A significant change from the last reported numbers is that Brazil has now overtaken South Korea in the top 10. Russia is just outside, in 11th place, with a GDP of $1.8 trillion.
While China’s GDP growth has slowed in recent years, projections still suggest the country will overtake the US as the world’s economic leader by 2030.
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One of the regions that is also expected to see growth in the near future is the Middle East and North Africa due to high oil prices – led by Iraq and Saudi Arabia in particular. Regional GDP growth in the region is expected to be around 5% in 2022.
Some of the world’s smaller economies have been hit particularly hard by the pandemic, and the war in Ukraine has been hit hardest by inflation and food shortages.
Tuvalu is the smallest economy in the world according to the IMF assessment at the level of 66 million dollars. Most of the bottom 50 are considered low- to middle-income and emerging/developing countries. According to the World Bank, per capita income levels in developing countries will be about 5% below pre-pandemic trends in 2022.
For example, Russia is expected to experience a GDP growth rate of -8.5% in 2022, although it remains to be seen how the costs of war and increasingly tough global sanctions will affect the country’s economic outlook.
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While global economic growth has already been revised downward, it is possible that the situation could worsen. Institutions such as the World Bank say inflationary risks are rising. Stable inflation, which has not occurred since the 1970s, is defined as an economy experiencing rising inflation with stable economic output.
Currently, global consumer inflation is currently estimated at 7%. As central banks around the world try to keep the situation under control, it is becoming harder to buy everyday goods and interest rates are rising.
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