debt instruments means BONDS
government bonds are safer because they are often backed by things like taxes, bridge & tunnel tolls, taxes from international shipping, airport fees, etc (things people have to pay)
if it is a $1000 bond, the government will sell it to you for like $500 but it says it can be worth $1000 after a month or a year & you can sell it or cash it for $1000 then
governments & companies are given credit ratings just like people by companies like standard & poors or moodys so that the buyer knows how good this repayment promise is
companies also sell bonds in a similar way
bonds are called junk bonds if they are issued by companies with bad credit ratings because its riskier . so, in return, junk bonds can have higher interest rates because its promise to repay the money is not as good
when a country like china buys US bonds, it's basically lending the US money. those bonds are a lot bigger & they are nicknamed T Bills or Treasury Bills
Debt instruments used to conduct monetary policy in Guyana (Treasury Bills).
- **91-day Treasury Bill**: This is mainly used for government financing and has a series code of GY0001. The money raised from this bill is stored in the Consolidated Fund, which is the main account of the government. The interest rate on this bill was 1.55% per annum in 2017⁴.
- **182-day Treasury Bill**: This is mainly used for sterilization, which means reducing the amount of money in circulation to control inflation and exchange rate pressures. The series code for this bill is GY0002. The money raised from this bill is stored in the Bank of Guyana's Deposit Account, which is a special account that does not form part of the government's budget. The interest rate on this bill was also 1.55% per annum in 2017⁴.
- **364-day Treasury Bill**: This is also used for sterilization and has a series code of GY0003. The money raised from this bill is also stored in the Bank of Guyana's Deposit Account. The interest rate on this bill was 1.54% per annum in 2017⁴.
**91-day Treasury Bill**
The 91-day Treasury Bill is a short-term debt instrument issued by the Government of Guyana. It is sold at a discount to face value and matures in 91 days. The purpose of the 91-day Treasury Bill is to raise short-term funding for the government. The money raised from the sale of 91-day Treasury Bills is deposited in the Consolidated Fund, which is the government's central account.
**182-day Treasury Bill**
The 182-day Treasury Bill is a short-term debt instrument issued by the Government of Guyana. It is sold at a discount to face value and matures in 182 days. The purpose of the 182-day Treasury Bill is to raise short-term funding for the government. The money raised from the sale of 182-day Treasury Bills is deposited in the Consolidated Fund, which is the government's central account.
**364-day Treasury Bill**
The 364-day Treasury Bill is a short-term debt instrument issued by the Government of Guyana. It is sold at a discount to face value and matures in 364 days. The purpose of the 364-day Treasury Bill is to raise short-term funding for the government. The money raised from the sale of 364-day Treasury Bills is deposited in the Consolidated Fund, which is the government's central account.
**Role of each bill**
The 91-day, 182-day, and 364-day Treasury Bills can be used for both government financing and sterilization. Government financing refers to the use of debt to raise funds for government spending. Sterilization refers to the use of open market operations to offset the impact of government spending on the money supply.
**Monetary policy bills and government bills**
Monetary policy bills are issued by the Bank of Guyana and are used to conduct monetary policy. Government bills are issued by the Ministry of Finance and are used to raise funds for government spending. Monetary policy bills and government bills are differentiated by their series. Monetary policy bills are issued in series A, B, C, and D. Government bills are issued in series E, F, G, and H.
**u u that commercial banks must hold as a percentage of their deposits. The Bank of Guyana can change this ratio to influence the amount of money available for lending and spending in the economy.
- **Treasury Bills**: Short-term debt securities issued by the government to finance its budget deficit or sterilize excess liquidity in the banking system. The Bank of Guyana auctions these bills on behalf of the government and sets the interest rates based on market conditions. The treasury bills have different maturities and purposes:
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