The modern state is, above all, a debtor. Global public debt reached a record high of 102,000 billion dollars in 2025, and the International Monetary Fund projects that the global debt-to-gross domestic product ratio will approach 100% by 2029—a threshold not reached since the immediate postwar period. Yet this aggregate figure masks a more far-reaching asymmetry: emerging and developing economies consistently borrow at interest rates two to four times higher than those charged to advanced economies, meaning that debt service can absorb the bulk of government revenue and eliminate the fiscal space needed for education, health care, infrastructure, and climate change adaptation. For some of these countries, the burden of debt service could absorb nearly half of public spending and more than 50% of revenue in 2026–2027, which is quite telling of the weight of public debt . Incremental reform won’t be enough to solve this debt crisis.
Faced with this impasse, one word has been circulating in financial circles for the last few years: tokenisation. Converting a government bond into a programmable digital token, tradeable on a blockchain, settled in seconds rather than in many days. The promise is appealing: widen the investor base, lower borrowing costs, give constrained states some fiscal room to breathe. Does it deliver?

In this context, asset tokenization—that is, the representation of financial claims, government securities, or real assets as programmable digital tokens on distributed ledgers—has evolved from a technological curiosity into a political tool. Central banks, finance ministries, and multilateral institutions are increasingly presenting tokenization as a means of alleviating the structural constraints that debt imposes on the state’s capacity to act. This paper examines this interpretive framework and asks whether tokenization constitutes a genuine easing of the fiscal and monetary constraints faced by indebted states, or whether it merely reimagines debt instruments without addressing the underlying distribution of sovereign risk, market power, and monetary authority. The argument put forward here is that tokenization offers real but limited efficiency gains—in terms of market access, speed of settlement, and collateral mobility—while leaving intact, and in some respects even exacerbating, the deep political and economic asymmetries that restrict the state’s autonomy.

For years, U.S. debt was viewed as a paradoxical phenomenon: it was growing rapidly, yet without triggering any visible disruption. The United States seemed capable of weathering military shocks, financial crises, and a pandemic by pushing back against fiscal constraints through a single tool—borrowing—while the markets continued to buy Treasury securities at persistently low rates. This situation fueled the notion of a lasting exception, based on the dollar’s central role, the depth of the U.S. bond market, and the U.S. economy’s ability to attract global savings. However, recent developments reveal a shift in the economic landscape: the debt stock has become so high that the return of higher long-term rates is turning the interest burden into a determining factor in economic policy. As of December 31, 2025, total federal debt stood at $38,514 billion, of which $30,847 billion was held by the public, making the government far more sensitive to refinancing conditions than in previous decades. Consequently, the stakes extend beyond the United States alone: they concern the stability of the international financial system, the attractiveness of dollar-denominated assets, and—particularly for Arab countries—the management of exchange rate regimes, reserves, and the cost of external financing.
The question is no longer whether U.S. federal debt will continue to rise. The real issue now is the political, economic, and financial cost of this trajectory. For nearly a quarter-century, the United States seemed to enjoy a unique privilege: financing wars, stimulus packages, a financial crisis, and then a pandemic through borrowing, without facing any lasting consequences. The dollar remained dominant, global demand for Treasury bonds stayed strong, and interest rates—which had long been low—created the illusion of “consequence-free” debt. This exceptional situation is now unraveling, as the debt burden has become enormous and the cost of refinancing has risen permanently.

Read more on September 1, 2026.

Public debt is divided into domestic public debt, held by economic agents residing in the issuing country, and external public debt, held by foreign lenders. Public debt refers to all loans taken out by government entities that have not yet been repaid. External debt refers to all amounts owed to foreign lenders or international organizations. It includes debt owed by the government as well as by businesses and individuals. The total amount owed to creditors constitutes the external debt. A low debt-to-GDP ratio may sometimes simply reflect an underdeveloped economy, lacking significant borrowing capacity or a solid financial infrastructure.
U.S. Department of the Treasury, Fiscal Data, “Debt to the Penny,” debt levels as of December 31, 2025.