Government bondsBonds are debt instruments, which means they are a way of b... More are – instruments – issued by national governments. Sometimes, they are also called “sovereign bonds”.
The (who buys the bonds) loans a certain amount of moneyMoney is a generally accepted medium of exchange to buy and... More to a country. The country promises to pay back the amount (the face value) at a certain date, plus periodic payments. Government bonds are usually denominated in the country’s own .
Government bonds are often seen as risk-free bonds because the government can raise taxes or create additional currencyWhat is currency? Currencies are the generally accepted medi... More in orderWhat is a trade order? In trading, an order can be defined... More to redeem the bond at maturity.
Some counterexamples do exist where a government has defaulted on its domestic currency debtDebt is a type of liability. It is an obligation by one pa... More, such as RussiaThe Russian Federation is the world's largest country by a... More in 1998 (the “ruble crisis”), though this is very rare. Another example is Greece in 2011. Its bonds were considered very risky, in part because Greece, being part of the , did not have its own currency.
