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Meltdown 101: From China to Luxembourg to the Caribbean, a look at what countries hold US debt

The Associated Press has reported the top ten lenders to the USA:

$776.4 billion: The amount of Treasury securities held by China at the end of June

$711.8 billion: The amount held by Japan

$214 billion: The amount by the U.K.

$191 billion: The amount collectively held by Saudi Arabia, Venezuela and 13 other oil exporters

$189.7 billion: Held by the Caribbean banking centers

$139.8 billion: Held by Brazil

$119.9 billion: Held by Russia

$104.2 billion: Held by Luxembourg

$99.8 billion: Held by Hong Kong

$77 billion: Held by Taiwan


As Christopher S. Rugaber explained, the top ten list is telling. Many countries have large holdings because of their financial sectors.

The fifth-largest holder of Treasurys is a collection of Caribbean countries, including the Bahamas, Bermuda, and the Cayman Islands, with $189.7 billion. The Treasury Department collectively calls the group “Caribbean Banking Centers.”

The Cayman Islands, for example, has become a major financial center. It is home to 9,000 hedge funds and other investment vehicles, according to a report last year by the Government Accountability Office. Those funds likely hold some Treasury securities.

Many investment funds use the Cayman Islands as an offshore tax haven, according to the GAO report.

Luxembourg, meanwhile, is the eighth-largest holder of U.S. Treasury securities, with $104.2 billion, just behind Russia at $119.2 billion.

The small country of 460,000 has a healthy banking sector whose companies are among Europe’s leading asset managers, according to the Luxembourg embassy’s Web site. Its large holdings of Treasurys likely reflect that reality. A call and e-mail to the Luxembourg embassy seeking comment weren’t returned.

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