Can Europe Really Dump Its US Debt Holdings ?
Recent geopolitical friction between the United States and the European Union, sparked by tensions over Greenland, has put a spotlight on the deep economic ties that bind them. As European leaders evaluate their strategic options against potential US pressure, one controversial idea has emerged: offloading their massive holdings of US debt.
While a "framework of a deal" reached at Davos has temporarily cooled the situation, EU nations are still preparing for future escalations. Two powerful countermeasures have been discussed. The first is a "trade bazooka" that would block US companies from the vast EU market, costing them billions. The second, more drastic option, involves selling off the trillions of dollars in US assets held across Europe.
But is this financial "nuclear option" actually feasible? Dumping such a large volume of assets could destabilize the global economy and create severe knock-on effects for the US financial system, including its exposure to the growing stablecoin market.
