Why does the US government care so much about demand for Treasuries?

The full answer

What reason does the government give for wanting more Treasury buyers?

The clearest statement comes from the Treasury Secretary. According to a CoinPaprika report, Scott Bessent argues that stablecoin demand for government debt could lower borrowing costs and help finance the federal deficit [2]. He expects the stablecoin sector to grow toward roughly $2 trillion over time, CoinPaprika reported [2].

The Treasury’s own words tie the same policy to the dollar’s standing. On 17 August 2026, announcing a proposed rule under the GENIUS Act, Bessent said Treasury wants to “cement the role of the U.S. dollar as the world’s reserve currency” [3]. How the Act links stablecoin reserves to Treasuries is covered on what reserves stablecoins must hold under the GENIUS Act.

If added demand lowers borrowing costs, as Bessent argues, then a lasting fall in demand from a large buyer group would push costs the other way. This follows from the argument reported in [2]. None of the sources cited here measures how large that effect is.

Who holds US Treasuries today, and how has foreign demand changed?

Treasury’s international capital (TIC) data track net foreign buying and selling. Treasury released the July 2026 data on 16 September 2026 [1]. In July the total net TIC inflow was $83.7 billion, of which $73.5 billion was private and $10.2 billion official [1]. Foreign residents increased their Treasury bill holdings by $38.8 billion that month [1]. In the same month private foreign investors were net sellers of $29.1 billion of Treasury bonds and notes, while foreign official institutions were net buyers of $25.5 billion [1].

The 12-month columns in Treasury’s table (billions of dollars, not seasonally adjusted) show a slower pace of foreign buying [1]:

• Private foreign net purchases of Treasury bonds and notes were $263.4 billion in the 12 months through July 2026, against $506.3 billion in the 12 months through July 2025.
• Foreign official institutions were net sellers of Treasury bonds and notes in both periods: $50.3 billion through July 2025 and $16.8 billion through July 2026.
• Foreign holdings of Treasury bills rose $49.4 billion in the 12 months through July 2026, against $250.5 billion a year earlier. Within that, foreign official holdings of Treasury bills fell $55.6 billion.

Treasury’s Major Foreign Holders table puts foreign holdings of US Treasury securities at the end of July 2026 at $9248.1 billion in total, including $1103.9 billion held in Japan and $618.0 billion in mainland China [8].

Private foreign buying of bonds and notes over the latest 12 months was about 52% of the year-earlier amount, and net additions to bill holdings were about one fifth. Both ratios are computed from the Treasury table [1].

Which countries own how much is harder to pin down. Treasury states that TIC data “cannot attribute holdings of U.S. securities with complete accuracy” [1]. A Treasury security bought by a foreign resident and held in custody in a third country does not show under its true owner, and Treasury concludes that it is difficult to draw precise conclusions about individual countries from the data [1].

How big is the US deficit and debt, and how sensitive is it to interest rates?

On 3 August 2026, the Treasury announced that it expected to borrow $739 billion in privately-held net marketable debt during the July–September 2026 quarter, assuming an end-of-September cash balance of $950 billion; I could not find the Congressional Budget Office’s deficit, debt and interest-rate projections when I checked on 2 October 2026. No CBO report text was among the saved sources, so no CBO figures are quoted here.

Where do stablecoins fit in?

Stablecoin issuers already hold Treasuries. Tether reported $141 billion in US Treasury exposure, combining direct holdings with reverse repurchase agreements, in its attestation for the fourth quarter of 2025, according to CoinPaprika [2]. The GENIUS Act, signed on 18 July 2025, lists US Treasuries maturing in 93 days or less among eligible reserves, CoinPaprika reported [2]. Treasury gives 18 January 2027 as the Act’s expected effective date [3].

Standard Chartered analysts estimate that stablecoin issuers could add $800 billion to $1 trillion of Treasury bill demand if the market doubles to about $2 trillion by the end of 2028, according to CoinPaprika, which describes the estimate as a forward-looking scenario and not a current figure [2]. Whether this is formal policy is covered on whether stablecoin demand for Treasuries is official policy, and the size question on whether stablecoins could help America’s debt problem.

What is the strongest evidence against the new-buyer story?

Standard Chartered’s estimate of $800 billion to $1 trillion in Treasury demand by 2028, as reported by CoinPaprika, assumes the stablecoin market doubles to about $2 trillion by the end of 2028 and is a forward-looking scenario, not an established outcome; Bessent separately expects the sector to grow toward roughly $2 trillion over time [2]. CoinPaprika, citing Bloomberg, put it at roughly $300 billion to $310 billion as of September 2026, with growth slowing after a two-year climb [2]. The same report says the sector would have to more than triple from current levels for the higher Treasury-demand estimates, such as Standard Chartered’s $800 billion to $1 trillion by 2028, to hold [2]. The other limit sits in Treasury’s own data: the TIC figures cannot say with precision which countries are buying or selling [1].

Does XRP have any part in Treasury demand?

The XRP Ledger hosts tokenized Treasury products. The Crypto Basic reported on 26 January 2026, citing RWA.xyz data, that the ledger held $150.2 million of tokenized US Treasury debt, 1.4% of the $10.13 billion on-chain [4]. These are Treasury products recorded on a ledger. None of the sources cited here describes XRP itself buying or financing US debt, which is the subject of whether the US is using XRP to pay off the national debt. How XRP relates to the dollar’s position is covered on whether XRP conflicts with US dollar dominance.