Japan has lost its decades long status as the global top creditor to Germany. A recent report suggests that a weakening yen, appreciating euro and American tariffs are responsible.
The Bloomberg report details that in 2024, Germany overtook Japan as the world’s top creditor, with the euro appreciating by around 5% against the yen. Germany’s rise is attributed to strong trade performance and a weaker Japanese currency. In real terms, Germany’s current account surplus reached 248.7 billion euros last year, compared to Japan’s 180 billion euros (29.4 trillion yen).
For Japan, a weak yen helped increase both foreign assets and liabilities. However, assets grew more rapidly. This is credited to Japanese companies investing more abroad, notably in the United Kingdom and the United States. According to Japan’s Ministry of Finance, industries such as finance, insurance, and retail played a major role.
The report also finds that China is closing the gap on the world’s top two creditors, with its relative growth exceeding that of both Japan and Germany.
In international terms, a creditor country is one that holds more foreign assets than it owes to other countries, such as through investments, loans, or savings. A country can be classified as a creditor or a debtor based on its international financial balance.
Since 2021, the gap between Japan and Germany regarding creditor status has narrowed. Most recently, the impact of U.S. President Donald Trump’s tariffs may have affected Japan’s ability to maintain its lead. Experts suggest that companies are considering moving production or assets to the United States to reduce the impact of trade restrictions.
The shift may also signal that the euro is now seen as a more stable, reliable funding currency and safe-haven asset. Confidence in the U.S. dollar and bonds has weakened, opening the door for others to capture greater market share. However, Japan still holds the largest proportion of U.S. government bonds—worth $1.3 trillion.
Japanese Finance Minister Katsunobu Kato was quick to reassure companies and countries that Japan remains an important and successful creditor.
“Given that Japan’s net external assets have also been steadily increasing, the ranking alone should not be taken as a sign that Japan’s position has changed significantly,” Kato told reporters.
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