Treasury Bills

Treasury bills are short-term noncoupon-bearing instruments issued by the government to finance its debt. Because the U.S. government’s tax revenues rarely cover expenditures, it relies on debt financing for the balance. Moreover, on the occasions when the government does not have a budget [Page 1627]deficit, it still sells new debt to refinance the old debt as it matures. Most of the debt sold by the U.S. government is marketable, meaning that it can be resold by its original purchaser. Treasury bills constitute only one of several types of securities issued by the U.S. Treasury to finance the U.S. national debt. The treasury issues four main types of marketable securities: (1) bills, (2) notes, (3) bonds, and (4) inflation-indexed securities.

Treasury bills are to be distinguished from ...