Treasury Bills Explained

With regard the markets you might sometimes hear reference to this term 'Treasury Bills'.

Now what exactly does this mean - just what is a treasury bill, how do you get them, what are they good for and who does get them and so on...

Well, a Treasury Bill is simply defined as a promise to repay a certain amount of money at a specific date by the Treasury, and this is not normally more than three months (91 days) later.

They are abbreviated often to "T-Bills" so if you see that term, then it is basically the same thing.

How are they issued?

Well, they are actually issued by an auction! This takes place weekly and they trade at a discount to their actual or face value.

What are they used for and what's their purpose?

Basically it is to do with liquidity and to remove some liquidity from the market.

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