How Has the U.S. National Debt Changed in 2025?

Up there with vastly larger nations, the Cayman Islands are among the top ten holders of U.S. Treasury securities. Their position looks rather surprising until we hear that the reason is the hedge funds that are domiciled there.

I only copied the top ten from a much longer list:

6 Facts: National Debt Update

1. China’s ownership of U.S. securities has diminished.

Above, you can see that China is #3 in the list of “Major Foreign Holders of Treasury Securities.” That #3 slot reflects the shift on ownership of U.S. Treasury securities. It demonstrates that, for the first time in 25 years, China is no longer the #2 foreign holder of US debt.

Instead, Japan and the UK top the list:

You might wonder (as did I) why China buys US treasuries. One answer is its trade surplus. Selling us so massive an amount of goods, China winds up with lots of dollars. Secure and sufficiently lucrative, treasuries were the logical destination. Now though those treasury purchases can become more of a problem because of tariffs.

2. Overall, U.S. Treasury ownership has shifted.

Continuing to change but starting during the 2010s (2010-1019), U.S. treasury ownership moved away from a 40 percent slice to less than 15 percent. Instead, more private investors have entered the market.

3. Our debt to GDP ratio has been rising.

By borrowing more, a nation’s bigger numerator can increase its debt to GDP ratio. Counting the debt held by the public (not government agencies like the Social Security Trust fund), the current U.S. debt to GDP ratio is close to 98 percent.

You can see that recently it was far lower:

4. U.S. debt was again downgraded.

Then, to all of this we can add a debt downgrade. Whereas in 2011 S&P Global and in 2023, S&P Fitch lowered their rating of the U.S. debt, during May, Moody’s added its name to the list. All of the downgrades were a single notch from the top.

The reasons? Our debt ceiling “standoffs,” our soaring deficit, and perhaps now our tariffs make the U.S. a less perfect borrower.

5. The congressionally mandated debt ceiling has had to go up.

During July 2025 the Congress had to again increase how much the U.S. could borrow. This time the amount was $41.1 trillion after a $5 trillion boost.

6. Now treasury securities have a digital connection.

In a June 2025 article, the Wall Street Journal explained a connection between demand for Treasury securities and digital currencies.

Their headline took us to stablecoin reserves:

And the Fed displayed the recent data on stablecoin reserves and Treasury securities:

Our Bottom Line: How Countries Borrow

By selling different kinds of securities countries add to their national debt. Borrowing from three groups of lenders, they secure funding from banks, from private non-banks, and from official creditors:

1. The banks in the first group can be domestic and foreign.
2. The second group is varied and large. Taking us to all private investors that are not banks, the list includes hedge funds, corporations, and you and me.
3. Different from the first two groups, the last one is official. It takes us to government agencies, central banks, and international agencies. It includes the government of China, the World Bank, and parts of the U.S. government like the Social Security Trust Fund.

And finally, this graphic might be helpful. We can think of the U.S. as an issuer while the investor might be you, me, a Cayman Islands hedge fund, or China. The intermediaries, like investment banks, connect issuers to investors:

So, where are we? With less from Group 3 and more from Group 2, U.S. treasury markets could become more volatile according to a NY Times column from a former Treasury official.

My sources and more: For today, I checked a slew of articles and papers. I started with this NY Times opinion column. From there, I went to the Council on Foreign Relations, this “TIC” page and how the Federal Reserve believes the TIC data (our table with information of foreign holders of treasuries) vastly underreports Cayman island holders. Then also we went back to Brookings, here and here, and WSJ. As for stablecoins, if you (like I) needed to read more to understand it, my Information came from WSJ and the Fed.

Please note that several of today’s several sections were in past econlife posts.