Here’s a problem that doesn’t get enough attention: the world’s most important bond market is slowly losing its biggest customers. Foreign governments used to hold roughly half of all outstanding US Treasury debt. That share has dropped to under 30%. United Overseas Bank thinks the private sector, specifically the stablecoin and tokenization crowd, is already doing it.
UOB, one of Singapore’s largest banks, has been making the case that regulated stablecoins and tokenized Treasury products are creating a new, reliable class of buyers for short-term US government debt. Stablecoin issuers need safe, liquid assets to back their tokens, and Treasury bills fit the bill perfectly.
The quiet shift in Treasury demand
Foreign official holders, think central banks and sovereign wealth funds, held approximately 50% of total outstanding US Treasury debt back 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 mountains of short-duration, high-quality collateral. Both have been buying Treasury bills in size.
