Loans of over 300 billion Switzerland significantly helps finance US debt

The US currently has debts of around 36,000 billion dollars, and Switzerland is one of its ten largest creditors. US government bonds are still considered a safe business. But that could change. With consequences for Switzerland and the entire global economy.

36,000 billion - 36 trillion - 36,000,000,000,000,000 dollars. However the US debt level is expressed, the figure is enormous. And the trend is upwards, despite all of DOGE's cuts.

This figure also shows the size of the US debt burden: the total amount owed by the US Treasury to its creditors is more than 120% of its gross domestic product. The EU allows the euro states a national debt ratio of 60 percent - however, more than half of the member states exceed this limit. The USA is in good company with its mountain of debt.

For comparison: Switzerland's debt amounts to around 141 billion Swiss francs, with a debt ratio of 17.2 percent of GDP.

Switzerland is the tenth largest lender to the USA

Switzerland plays a significant role among the USA's creditors. Government bonds worth around 300 billion dollars are held by public and private owners in Switzerland. They collect interest and have the right to reclaim the borrowed money.

The figure of 300 billion dollars comes from a recent study by the Flossbach von Storch Research Institute, writes SRF. The loan amount was calculated in January 2025. This puts Switzerland in tenth place among the largest foreign lenders. At the top of the ranking are Japan, followed by China and the UK.

However, the USA is not completely in the financial hands of the rest of the world. Depending on the source, creditors in the United States hold 70 to 75 percent of US government bonds.

In Switzerland, it is mainly pension funds, AHV compensation funds, banks, insurance companies and the Swiss National Bank that invest in US government bonds. The pension funds alone hold bonds worth several dozen billion dollars.

This means that private individuals are also indirectly contributing to the financing of the US government budget and its mountain of debt through their pension provision. Of course, this is just one example of how closely the Swiss economy is intertwined with the US economy and depends on its positive development.

When US bonds turn from good business into a flop

For decades, the USA was regarded as a reliable debtor and bonds issued to it as a never-ending source of interest income.

However, the trade conflict and the weakening dollar have shaken investor confidence. Should the USA no longer be able to pay its interest and redeem its bonds, these investments would become a billion-dollar grave for countries around the world - including Switzerland.

The US government under Donald Trump needs enormous sums to cover government spending. For the current year, 10,000 billion dollars are required to refinance existing debt and cover the deficit. Next year, this amount will rise to 11,000 billion dollars. If the refinancing costs were to rise by 10 percent annually, it would be over 21,000 billion dollars after eight years. Where the limit of sustainability lies for the USA is a hypothetical question. If reality provides the answer, the global economy is in big trouble.

Could the USA go bankrupt?

Financial expert Christof Schürmann from the Flossbach von Storch Research Institute warns of the consequences of this development. "The deficit and debt are already very high. If the trend towards significantly higher debts and high budget deficits continues, the country will not be able to sustain this forever," he explains. If the deficit is not reduced, investors could demand higher interest rates, which would place a further burden on the USA.

The fact that the interest burden is rising, i.e. the sum of all debt interest that the USA has to pay in a year, is of course nothing new. The report by the Flossbach von Storch Research Institute shows that the interest burden has risen from 223 billion dollars in 2000 to 952 billion dollars in the current year and could reach 1783 billion dollars in ten years.

Although the possibility of an economic collapse in the USA seems unlikely, the dependence on foreign lenders remains. Should the US government take protectionist measures, this could reduce the willingness of other countries to finance the deficit. "The next few years are crucial," emphasizes Schürmann.

The editor wrote this article with the help of AI.