Money

Visualizing the Distribution of Household Wealth, By Country

Published

10 months ago

April 13, 2022

Eleonora Nazander

Featured Creator

Article/Editing:

Carmen Ang

Visualizing the Distribution of Household Wealth, By Country

A majority of the world’s wealth is concentrated in just a few countries. In fact, almost a third of household wealth is held by Americans, while China’s population accounts for nearly a fifth.

Using data from Credit Suisse, this graphic by Eleonora Nazander shows the distribution of household wealth worldwide, highlighting the wealth gap that exists across regions.

Top 10 Wealthiest Countries

To help simplify things, this graphic shows how much household wealth each country would have if the world only had $100.

As the graphic illustrates, the top 10 wealthiest countries would hold an estimated $77, or 77% of global household wealth. Here’s a breakdown of what their cut of $100 would be:

Country	Total Wealth ($B)	Share of $100
🇺🇸 United States	$105,990	$29.40
🇨🇳 China	$63,827	$17.71
🇯🇵 Japan	$24,992	$6.93
🇩🇪 Germany	$14,660	$4.07
🇬🇧 United Kingdom	$14,341	$3.98
🇫🇷 France	$13,729	$3.81
🇮🇳 India	$12,614	$3.50
🇮🇹 Italy	$11,358	$3.15
🇨🇦 Canada	$8,573	$2.38
🇪🇸 Spain	$7,772	$2.16
Total	$278 Trillion	$77.09

The U.S. comes in first place, holding $29.40, or almost a third of total wealth, while China comes in second, accounting for $17.71.

This makes sense considering the high concentration of ultra-wealthy individuals in both countries—China and the U.S. are home to more than half of the world’s billionaires, and eight of the 10 richest people on the planet are Americans, including the world’s richest, Elon Musk.

Japan ranks third on the list, accounting for $6.93. Like the U.S. and China, Japan also has a high portion of ultra-high net worth citizens, or individuals with a net worth of $30 million or more.

Interestingly, India ranks seventh on the list, despite having the third-highest number of billionaires worldwide and a massive population of 1.4 billion. One contributing factor to this could be the country’s relatively high levels of poverty.

Wealth Inequality

It’s important to note that, while the U.S. and China hold a majority of the world’s wealth, both countries still struggle with wealth inequality.

Currently, the top 1% of U.S. households hold 31.7% of the country’s household wealth. And while China has made progress on poverty in the last decade through rapid economic growth, the wealth gap between the country’s rich and poor has widened in recent years.

Governments in both countries have announced plans to tackle wealth inequality. For instance, the Biden administration is working to pass legislation that would increase taxes on businesses and wealthy Americans. Meanwhile, the Chinese government announced its five-year plan to crack down on private enterprise, in an attempt to break up monopolies and ultimately achieve “common prosperity.”

This article was published as a part of Visual Capitalist's Creator Program, which features data-driven visuals from some of our favorite Creators around the world.

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Money

Visualizing $65 Trillion in Hidden Dollar Debt

Since 2008, the value of unrecorded dollar debt has doubled. Here’s why this is increasing risk in global financial markets.

Published

3 weeks ago

January 8, 2023

Dorothy Neufeld

Visualizing $65 Trillion in Hidden Dollar Debt

This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email every week.

The scale of hidden dollar debt around the world is huge.

No less than $65 trillion in unrecorded dollar debt circulates across the global financial system in non-U.S. banks and shadow banks. To put in perspective, global GDP sits at $104 trillion.

This dollar debt is in the form of foreign-exchange swaps, which have exploded over the last decade due to years of monetary easing and ultra-low interest rates, as investors searched for higher yields. Today, unrecorded debt from these foreign-exchange swaps is worth more than double the dollar debt officially recorded on balance sheets across these institutions.

Based on analysis from the Bank of International Settlements (BIS), the above infographic charts the rise in hidden dollar debt across non-U.S. financial institutions and examines the wider implications of its growth.

Dollar Debt: A Beginners Guide

To start, we will briefly look at the role of foreign-exchange (forex) swaps in the global economy. The forex market is the largest in the world by a long stretch, with trillions traded daily.

Some of the key players that use foreign-exchange swaps are:

Corporations
Financial institutions
Central banks

To understand forex swaps is to look at the role of currency risk. As we have seen in 2022, the U.S. dollar has been on a tear. When this happens, it hurts company earnings that generate revenue across borders. That’s because they earn revenue in foreign currencies (which have likely declined in value against the dollar) but end up converting earnings to U.S. dollars.

In order to reduce currency risk, market participants will buy forex swaps. Here, two parties agree to exchange one currency for another. In short, this helps protect the company from unfavorable foreign exchange rates.

What’s more, due to accounting rules, forex swaps are often unrecorded on balance sheets, and as a result are quite opaque.

A Mountain of Debt

Since 2008, the value of this opaque, unrecorded dollar debt has nearly doubled.

Date	Non-U.S. Bank Unrecorded Debt	Non-U.S. Shadow Bank Unrecorded Debt
2022*	$39.4T	$26.0T
2021	$37.1T	$25.0T
2020	$34.5T	$22.9T
2019	$32.9T	$21.5T
2018	$32.4T	$20.1T
2017	$31.2T	$18.8T
2016	$27.9T	$17.0T
2015	$25.1T	$15.6T
2014	$30.0T	$17.0T
2013	$30.8T	$15.7T
2012	$28.9T	$15.9T
2011	$27.5T	$14.7T
2010	$24.8T	$15.0T
2009	$21.4T	$12.1T
2008	$21.9T	$12.4T

*As of June 30, 2022

Driving its rise in part was an era of rock-bottom interest rates globally. As investors sought out higher returns, they took on greater leverage—and forex swaps are one example of this.

Now, as interest rates have been rising, forex swaps have increased amid higher market volatility as investors look to hedge currency risk. This appears in both non-U.S. banks and non-U.S. shadow banks, which are unregulated financial intermediaries.

Overall, the value of unrecorded debt is staggering. An estimated $39 trillion is held by non-U.S. banks along with $26 trillion in overseas shadow banks around the world.

Past Case Studies

Why does the massive growth in dollar debt present risks?

During the market crashes of 2008 and 2020, forex swaps faced a funding squeeze. To borrow U.S. dollars, market participants had to pay high rates. A lot of this hinged on the impact of extreme volatility on these swaps, putting pressure on funding rates.

Here are two examples of how volatility can heighten risk in the forex market:

Exchange-rate volatility: Sharp swings in USD can spur a liquidity crunch
U.S. interest-rate volatility: Sudden rate fluctuations can mean much higher costs for these trades

In both cases, the U.S. central bank had to step in to provide liquidity in the market and prevent dollar shortages. This was done through pumping cash into the system and creating swap lines with other non-U.S. banks such as the Bank of Canada or the Bank of Japan. These were designed to protect from declining currency values and a liquidity crunch.

Dollar Debt: The Wider Implications

The risk from growing dollar debt and these swap lines arises when a non-U.S. bank or shadow bank may not be able to hold up their end of the agreement. In fact, on a daily basis, there is an estimated $2.2 trillion in forex swaps exposed to settlement risk.

Given its vast scale, this dollar debt could have greater systemic spillover effects. If participants fail to pay it could undermine financial market stability. Because demand for U.S. dollars increases during market uncertainty, a worsening economic climate could potentially expose the forex market to more vulnerabilities.