How a British Overseas Territory Became the Largest Holder of U.S. Debt

Image Source: TUBS – CC BY-SA 3.0

China, which was the largest holder of U.S. government debt as recently as 2019, has cut its holdings to the lowest level since 2008, driven by changing trade patterns, geopolitical concerns, and domestic economic pressures.

The Cayman Islands has emerged as an unlikely place to fill the gap. This small British overseas territory held $427 billion in U.S. Treasuries as of November 2025, making it the sixth-largest foreign holder. But a 2025 Federal...