Governments around the world, including the United Kingdom and the United States, are facing high levels of national debt.

Traditional approaches to managing and repaying debts can rely on taxation, bond issuances, and monetary interventions, including cutting back on public spending, which comes with future ramifications.

With advances in distributed ledger technology, innovative models for reducing debt are emerging. are emerging. Hedera Hashgraph, with its enterprise-grade infrastructure, presents a case for how the DLT network could reshape debt repayment and transparency.

Government Debt: A Growing Challenge

Reports say the US national debt has surpassed $37 trillion. Data from the U.S. Department of the Treasury shows that as of August 2025, the US debt reached $37.25 trillion.

Debt levels have surged in economies due to overspending and a myriad of issues. Removing this debt often consumes large portions of national budgets, leaving fewer resources for healthcare, education, and more.

There’s now an opportunity for new technologies to streamline processes, improve transparency, and potentially unlock new funding mechanisms to reduce debt. Distributed ledgers like Hedera Hashgraph are uniquely positioned to provide such efficiencies.

Why Hedera Hashgraph?

Hedera stands out among distributed ledger technologies for multiple reasons. As many already know, the network is governed by a council of global organizations, ensuring stability and institutional trust.

HBAR also provides very low transaction fees and high throughput, making it capable of handling thousands and millions of transactions daily. The network also offers finality in seconds, a crucial feature for large-scale financial systems where delays can lead to significant costs.

For governments, the predictability and security of Hedera’s architecture make it a strong candidate for debt applications. Its Hedera Token Service (HTS) allows the issuance of digital representations of assets, while the Consensus Service (HCS) provides immutable, auditable records that could be applied to debt management.

Tokenizing Bonds on Hedera

One of the most straightforward applications of Hedera in debt repayment would be the tokenization of government bonds. By issuing bonds on Hedera’s network.

Governments could create digital securities that can be distributed to institutional and retail investors globally, similar to the tokenization of real-world assets.

This approach would reduce administrative overhead, cut settlement times, and improve investor trust through auditable transparency.

It would also expand access to debt markets, attracting new global participants who might otherwise face barriers in traditional systems.

Secretary of the Treasury Scott Bessent has said stablecoins can contribute to reducing US debt, as global users acquiring stablecoins would also be investing in US treasuries.

Microtransaction Models for Debt Repayment

Hedera’s microtransaction capabilities offer another innovative approach to tackling government debt. Instead of waiting for semi-annual or annual payments, governments could program tokenized bonds to distribute interest in real time.

A bondholder could receive fractional payments each day or every hour, representing accrued interests.

Continuous settlement models could make government debt more attractive to investors by providing steady cash flows. At the same time, governments could benefit from smoothing repayment schedules.

Transparency and Public Trust in the Government

One of the main criticisms of government debt management is the lack of transparency. Citizens of nations often have little visibility into how debt is structured, serviced, or repaid.

By leveraging Hedera, every debt-related transaction from issuance to repayment can be recorded immutably and be publicly verifiable.

This level of transparency could enhance public trust and reduce political controversies around borrowing practices. It could also strengthen investor confidence, lowering borrowing costs for governments that are able to demonstrate reliable accountability.

Governments could issue tokenized bonds payable directly in central bank digital currencies (CBDCs) or tokenized assets.

The combination would create a fully on-chain, interoperable ecosystem for public financees, streamlining issuance and repayments.

Hedera’s governance model, which includes organizations from multiple sectors, could give it a neutral standing that could support cross-border applications for debt financing.

Challenges to Adoption for Hedera

Despite how streamlined the Hedera network could make debt repayments, hurdles in the road do remain. Regulatory approval would be required to tokenize and distribute debt on a public ledger.

Cybersecurity, while very strong on Hedera, would need to be continuously audited to satisfy national security concerns.

Governments may also be slow to adopt decentralized infrastructures due to reliance on traditional financial intermediaries and legacy systems.

While tech would be unable to erase government debts overnight, Hedera Hashgraph offers tools that can make debt management more efficient, transparent, and collaborative with the nation.

By tokenizing currencies and sovereign debt and recording real-time payments immutably, Hedera could reshape how governments issue and repay obligations.

Instead of replacing traditional systems, Hedera could do its best to complement them and introduce efficiencies that reduce big costs and aid in strengthening public trust.