Savings Bonds

Savings bonds are a distinct class of bonds issued by governments that can be cashed at par at the investor’s discretion, for example, U.S. Federal Government Savings Bonds, Canada Savings Bonds, and gilts in the United Kingdom.

Sovereign bonds in general are important indicators, by way of their prices, of the creditworthiness of a government, how easily it can raise cash, and how its policies are viewed by the public. Higher government borrowing costs usually imply higher costs of borrowing throughout the economy and a greater burden of public debt. However, savings bonds in particular take on special importance because they are typically motivated by a desire to broaden the public debt base of governments by attracting small investors. These are safe securities sold in small ...

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