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Denmark has floated what it likely hoped would sound like a financial threat. Instead, it exposed a deep misunderstanding of how global finance actually works.

A Danish pension fund, AkademikerPension, announced plans to sell roughly $100 million in U.S. Treasury holdings by the end of January, citing concerns about America’s credit rating. The fund acknowledged, however, that the ongoing dispute over Greenland made the decision “easier.” European officials have gone further, openly threatening to divest from U.S. government debt, corporate bonds, and equities as retaliation for tariff pressure tied to Greenland.

President Donald Trump, speaking at the World Economic Forum in Davos, responded with characteristic confidence, stating that Europe was free to proceed—but that the United States “holds all the cards.”

On this point, Trump is absolutely correct.

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What ‘Holding U.S. Debt’ Actually Means

Many people—including some policymakers—misunderstand what it means when foreign entities “hold U.S. debt.” Every nation maintains foreign exchange reserves through its central bank, typically composed of foreign currencies and government bonds. These reserves allow countries to stabilize their own currencies, manage trade, and provide liquidity during crises.

U.S. Treasuries dominate these reserves for a simple reason: they are the safest, most liquid asset on earth.

As of the third quarter of 2025, the U.S. dollar accounted for 56.92 percent of global allocated foreign exchange reserves—and that figure only includes Treasury securities. It excludes other dollar-denominated assets such as corporate bonds and equities, which massively understate true dollar dominance.

According to the U.S. Treasury’s 2024 international capital survey, foreign holdings of U.S. securities total $30.9 trillion, including:

• $8.2 trillion in Treasury debt
• $1.3 trillion in agency debt
• $4.2 trillion in corporate bonds
• $16.9 trillion in U.S. equities

No other country offers anything remotely comparable.

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The Dollar’s Hidden Dominance

The dollar’s role in global commerce is even more overwhelming. While roughly 40–50 percent of global trade is invoiced directly in dollars, the dollar appears on 89.2 percent of all foreign exchange transactions, according to the Bank for International Settlements 2025 survey.

Even when two non-dollar economies trade with each other, the dollar usually acts as the intermediary. A Brazilian firm paying a Japanese supplier typically converts reais to dollars, then dollars to yen. The dollar facilitates the transaction even if it never appears on the invoice.

When this “vehicle currency” function is included, the dollar’s role in enabling global commerce approaches 90 percent.

Why ‘Dumping U.S. Debt’ Fails

For decades, critics have floated the so-called “nuclear option”—a coordinated global sell-off of U.S. debt. It has never happened because it cannot work.

Treasuries trade hundreds of times before maturity. The U.S. government only pays at maturity, and it is irrelevant who holds the debt at any given moment. If prices fall due to heavy selling, the Federal Reserve can—and does—step in through open-market operations.

If every foreign holder tried to sell at once, prices would collapse—and the U.S. Treasury would simply buy back its own debt at a discount. In that scenario, Trump would go down in history as the president who reduced the national debt.

By contrast, foreign sellers would lock in losses.

The Danish fund’s $100 million sell-off would not even register against the $500–900 billion in daily Treasury trading volume. Treasury Secretary Scott Bessent correctly dismissed the move as negligible, noting Denmark has been reducing Treasury exposure for years.

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Europe’s Divestment Fantasy

Some EU officials have also threatened wholesale divestment from U.S. equities and corporate bonds. This would be economic self-harm.

European investors bought U.S. stocks because they believed those companies offered superior returns. Selling them to buy weaker alternatives makes no financial sense. Worse, most U.S. equities held by Europeans are owned by private institutions, not governments.

For Europe to force divestment, governments would need to pass sweeping, coercive laws compelling private firms to sell. Prices would drop—briefly—and U.S. and Asian investors would buy the assets at a discount. Europe would lose value. Others would gain.

No Viable Alternative Exists

The idea of abandoning the dollar has circulated since World War II. It has never materialized because there is no alternative. Even BRICS has failed to replace the dollar, despite years of effort. China cannot persuade its own partners to adopt the yuan beyond marginal use.

The dollar remains dominant because it is liquid, trusted, stable, and backed by the world’s largest economy—a government that has never defaulted.

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Conclusion

Denmark’s threat to sell U.S. debt over Greenland is not leverage—it is theater. The global financial system is built on the dollar, and those who attempt to weaponize divestment only weaken themselves.

Trump’s calm response was not bravado. It was realism.

The United States does, in fact, hold all the cards.

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