The numbers are stark. In 2012, foreign central banks and sovereign wealth funds held roughly half of all US Treasury debt. By last year, that share had dropped below 30%.
A gap has opened in the world’s most important bond market. United Overseas Bank, one of Singapore’s largest banks, has been making the case that the private sector is already filling it.
The buyers stepping in are not the usual suspects. Money market funds have long been a fixture in short-term government paper. The newer force is stablecoin issuers.
These entities are required by the logic of their own business to hold high-quality, liquid collateral against every token in circulation. Treasury bills fit that requirement perfectly.
Tokenized Treasury products, which wrap government debt in a digital layer that can trade faster than the underlying bonds, add another channel. This is not a speculative bet. The demand is structural.
Stablecoin issuers do not choose to hold Treasurys because yields are attractive. They hold them because they must. Every dollar of stablecoin in circulation needs a dollar of safe assets behind it.
Short-duration US government debt is the safest, most liquid asset in the world. The result is a new and potentially durable source of demand for Treasury bills.
UOB’s argument is that this private sector demand can replace some of what foreign official buyers have withdrawn. If that holds, the implications cut across the entire financial system. A Treasury market that can find buyers without having to push yields higher to attract reluctant investors is a more stable Treasury market.
That stability matters for mortgage rates, for corporate borrowing costs, for the yield on every dollar of savings parked in money market funds. The shift is quiet.
It does not show up in the headlines. Foreign governments selling Treasurys is a story that gets attention. Stablecoin issuers accumulating them is a technical footnote.
But the scale is real. Money market funds and stablecoin issuers both need mountains of short-duration, high-quality collateral. Both have been buying Treasury bills in size.
The Treasury market has been losing its biggest customers for more than a decade. The decline in foreign official holdings from roughly 50% of outstanding debt to under 30% is a long, slow unwind.
It did not happen in a crisis. It happened year after year as central banks diversified reserves, as sovereign wealth funds shifted allocations, as geopolitical tensions rewrote the rules of reserve management. The question has always been who would replace them.
UOB’s answer is that the replacement is already underway. The private sector is stepping in.
Stablecoin issuers and tokenized Treasury products are creating a new class of buyers that did not exist a decade ago. They are not motivated by yield-chasing or macro bets. They are motivated by the need for safe, liquid assets to back their own liabilities.
That is a different kind of demand. It is less likely to disappear when rates fall or risk appetite shifts. The numbers tell the story.
Foreign official holders held approximately 50% of total outstanding US Treasury debt in 2012. By 2023, that figure had slipped below 30%.
Into that gap have stepped two groups: money market funds and stablecoin issuers. Both need short-duration, high-quality collateral. Both have been buying Treasury bills in size.
A quiet shift in Treasury demand is underway. If UOB is right, it may stabilise the market without requiring higher yields to attract reluctant investors.
That matters for everything from the cost of government borrowing to the returns on the safest assets in the world.
{“@context”: “https://schema.org”, “@type”: “NewsArticle”, “headline”: “Private investors fill gap as foreign holdings of US debt decline”, “description”: “The numbers are stark. In 2012, foreign central banks and sovereign wealth funds held roughly half of all US Treasury debt. By last year, that…”, “datePublished”: “2026-06-29T13:12:00+00:00T09:30:00+00:00”, “author”: {“@type”: “Person”, “name”: “Henry Thomas”}, “publisher”: {“@type”: “Organization”, “name”: “InfoPulse Today”, “url”: “https://newsfeed.infopulsetoday.com/”}}
