Van den Noord, a researcher with the Macro & International Economics section, and Subacchi argue that this idea is misleading, in spite of Europe holding more than $12 trillion in US assets.

Why selling US debt is not realistic

Most US assets held in Europe belong to private investors such as pension funds and insurers, not governments. This makes coordinated political action impossible. A large-scale sell-off would also hurt Europe itself by lowering asset values and destabilising financial markets. Using these holdings as pressure would therefore be self-defeating.

The real leverage lies in future choices

Europe’s influence does not come from selling what it already owns, but from decisions about future investments. The US relies on continued foreign demand to finance its debt. If European investors gradually reduce new purchases, this could matter over time. Such a shift would happen slowly and quietly, driven by many individual investors rather than political decisions.

Why US assets may become less attractive

US government bonds have long been valued for their safety, convenience and stable returns. These advantages are weakening. Political uncertainty around debt repayment, trade restrictions and growing global fragmentation all increase risk. Higher interest rates may compensate in the short term, but currency risks reduce long-term returns.

What this means for Europe

Europe does not have a financial ‘weapon’ against the US. But over time, changing investment patterns could still reshape the global financial balance. The authors argue that Europe should focus on strengthening euro-denominated safe assets and offering investors credible alternatives closer to home, rather than on confrontation.