Who owns EU government debt in 2025?

This article is written in simple language for students and general readers.

The four main holders

• Domestic investors: local banks, insurers, pension funds, and sometimes households. In many countries they own a big share.
• Other EU investors: neighbors often buy each other’s bonds (for example, French or German funds buying Italian or Spanish bonds).
• Non-EU investors: global funds and central banks outside Europe (for example, in the US, UK, or Asia).
• The ECB (Eurosystem): since 2015 the ECB bought a large amount of government bonds. It still holds a significant share today, though it is slowly letting that stock shrink.

Simple patterns across Europe

• Italy and Spain: more debt is held at home (by domestic investors and the national central bank). This is called “home bias”.
• Germany, France, the Netherlands: a larger share is owned by foreign investors, including many outside the EU, because these bonds are seen as very safe and easy to trade.
• Smaller markets (e.g., Baltics, Cyprus): often rely more on foreign holders because their local investor base is small.
• ECB’s role: in several big countries the ECB still owns about a quarter to a third of government bonds.

Why EU countries buy each other’s debt

Inside the eurozone there is no currency risk, so buying a neighbor’s bonds is natural. Investors want to diversify, manage risk, and mix different yields (very safe German bonds with higher-yield Italian bonds). Rules for banks also make EU government bonds attractive.

Benefits and risks (kept simple)

• Benefit: a wider investor base can keep borrowing costs lower and markets more stable.
• Risk of spillovers: if one country gets into trouble, others that hold its bonds can be hit too (contagion).
• Bank–sovereign link: when domestic banks hold a lot of their own government’s bonds, stress can move back and forth between the state and the banks (the “doom loop”).
• ECB cushion: ECB holdings can calm markets, but there are questions about how quickly those bonds can roll off without pushing yields up.

What changed since the euro crisis and COVID-19?

• Euro crisis (2010–2012): foreign investors cut exposure to stressed countries; domestic investors and the ECB took a bigger role.
• COVID-19: the ECB bought many bonds to keep financing costs low. Foreign private investors’ share fell in some places and recovered later.
• Now (2025): the ECB is letting its portfolio shrink slowly, and global investors are again important buyers—especially in core countries.

Why ownership matters for policy

Debt ownership shapes debates about EU fiscal rules, bank regulation, and ideas like joint EU bonds. Supporters say euro-wide bonds could spread risk and create a common “safe asset”. Critics worry about moral hazard. Either way, the fact that EU countries already own a lot of each other’s debt shows how interconnected the eurozone has become.

FAQ

Who owns Italy’s debt?

Mostly domestic investors (banks, insurers, pension funds, households) and the ECB. A smaller share is held by foreign investors, including other EU countries.

Does Germany hold French bonds?

Yes. German investors hold French government bonds, and French investors hold German Bunds. Cross-holdings are common in the eurozone.

How much EU debt is owned by the ECB?

The ECB (via the Eurosystem) still holds a large share of euro-area government bonds. In many big countries this is roughly a quarter to a third of the total, but the share varies and is slowly declining.

Why do EU countries buy each other’s debt?

To diversify, manage risk, and access different yields. Within the euro area there is also no currency risk, which makes cross-border investing easier.

Sources: European Central Bank (Securities Holdings Statistics, APP/PEPP updates), Eurostat (government finance), BIS. Summary based on official information available in 2025.