What Is the Difference Between Treasury Bills and Treasury Bonds?

Treasury bonds are government bonds that have a maturity period. Depending on the maturity period, term bonds can also be divided into short-term, medium-term and long-term.

Time bonds

Right!

Treasury bonds are government bonds that have a maturity period. Depending on the maturity period, term bonds can also be divided into short-term, medium-term and long-term.

Chinese name

Time bonds

Foreign name

A treasury

Definition

Treasury bonds with fixed maturity period

Classification

Short-term, medium-term, and long-term bonds

Classification of term bonds

(1) Short-term national debt ^[1]

Short-term government bonds refer to government bonds with a maturity period of one year or less. Short-term Treasury bonds generally include administrative treasury bonds and fiscal treasury bonds. Administrative treasury bonds are debts incurred by administrative organs in the execution of their tasks. The purpose is to seek administrative convenience, not to solve the problem of imbalance in fiscal revenue and expenditure: fiscal treasury bonds are government bonds issued because the treasury funds are temporarily ineffective. There are mainly bank borrowings, fiscal overdrafts and treasury bills.

(2) Medium-term Treasury bonds

Medium-term national debt refers to national debt with a repayment period of more than one year (excluding one year) and less than ten years. Compared with short-term Treasury bonds, the repayment period of medium-term Treasury bonds is moderate, and the government can use the funds obtained from the issuance of medium-term Treasury bonds for a longer period of time. As a result, in many countries, governments often use funds raised from the issuance of medium-term treasury bonds to finance fiscal deficits or invest. For example, the Treasury bills issued by China in 1981 are aimed at raising funds for national economic construction and making up for fiscal deficits.

(3) Long-term national debt

Long-term Treasury bonds are term bonds with a repayment period of more than 10 years (excluding 10 years). Due to the long repayment period of this type of long-term national debt, it can effectively reduce the liquidity of this part of social funds and reduce the tediousness and abuse of the exchange of national debt. However, on the other hand, it has low flexibility, poor liquidity, and weak liquidation capacity. Therefore, banks cannot generally use long-term government bonds as reserve assets. At the same time, private individuals and companies are often reluctant to buy long-term government bonds. Therefore, if there are no corresponding measures, it will be difficult to sell long-term government bonds.