ABSTRACT

Foreign Investment in U.S. Securities [March 5, 2014]   [open pdf - 379KB]

"Foreign capital inflows play an important role in the U.S. economy by bridging the gap between domestic supplies of and demand for capital. Such inflows peaked in 2007 in nominal terms. In 2008 and 2009, foreign capital inflows dropped sharply as the financial crisis and global economic downturn unfolded. At times, foreign investors have looked to U.S. Treasury securities as a 'safe haven' investment, while they sharply reduced their net purchases of corporate stocks and bonds. Since the financial crisis, foreign private investments generally have outpaced foreign official inflows, but foreign private purchases of U.S. corporate stocks and bonds generally have not rebounded to the level experienced prior to the financial crisis. Foreign investors now hold more than 50% of the publicly held and traded U.S. Treasury securities. The large foreign accumulation of U.S. securities has spurred some observers to argue that this large foreign presence in U.S. financial markets increases the risk of a financial crisis, whether as a result of the uncoordinated actions of market participants or by a coordinated withdrawal from U.S. financial markets by foreign investors for economic or political reasons. […] This report relies on a comprehensive set of data on capital flows represented by purchases and sales of U.S. government securities and U.S. and foreign corporate stocks and bonds into and out of the United States; the data is reported by the Treasury Department on a monthly basis."

Report Number:
CRS Report for Congress, RL32462
Author:
Publisher:
Date:
2014-03-05
Series:
Copyright:
Public Domain
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Via E-mail
Format:
pdf
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application/pdf
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