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Treasury bills (USA)

Category — Sovereign Bonds
Treasury bills or T-bills are another government debt instrument. A bill is a US Treasury’s short-term discount security with maturities ranging from 3 months to 1 year. Treasury bills are zero-coupon securities. This type of security is offered at the Treasury auctions on a competitive basis.

Income comes from the sale of a security at a discount compared to the par value. Treasury bills are redeemed at their nominal value. Also, bills of exchange can be sold on the secondary market before the maturity date. The Federal Reserve System uses these securities in its national monetary policy.

Unlike other Treasury securities, the investor won’t find a column indicating the coupon payment’s interest rate in the quote information. The Central Banks issue and redeem Treasury bills on behalf of the Treasuries.

The state’s profit comes at the time of the bill sale, meaning additional funds get added to its budget. The holder’s benefit comes at the time when the treasury bill is redeemed - when the state buys the bill at the par value. In other words, the buyer provides a loan to the state.

It’s important to note that treasury bills aren’t only used in the United States but also in other countries with fairly developed economies since such securities pose no risk. In Russia, treasury bills are purchased by commercial banks - that is, by legal entities. In other countries, individuals can also purchase a bill of exchange.
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