State securities

State securities, definition, types

Government securities - tool (in the form of securities) issued by the state. Most often these are various types of bonds that are issued under the state security, placed on the market for the solution of different tasks, for example, financing the budget deficit or sterilization of the money supply. These securities are debt securities. In fact, this is the debt obligation of the Issuer to the acquirer of the obligation by the Issuer undertakes to pay on time and in full, to pay interest on it, if they are due in accordance with the contract, as well as to perform other obligations stipulated in the contract, the purchase of securities.
The main feature of the government bond yield, which is formed as a consequence of annual income for a security to its market price.
Now there are securities as long-term government obligations, short-term government obligations, bonds state savings loan, Federal loan bonds, short-term liabilities, gold certificates, internal currency loan bonds, etc. The basic understanding is that the state bonds of a financial instrument with a fixed income, in which the yield is inversely proportional to their market price.
State securities
State securities may be issued by the Central authority, authority of the place, a separate, relatively independent of the state institutions, as well as the organization, which enjoys state support. Therefore, some of the securities that were issued by private entities, to a certain extent, may have the status of state securities, if is guaranteed to him the state of yield.
The purpose of issue of State securities
Emission (issue) of the State securities used for the solution of the following tasks:
There are the following kinds of State securities, which depend on the objectives of the issue:
1.) Debt securities, we need to cover a permanent deficit of the state budget. These securities, as a rule, long-term and medium-term.
2.) Securities, which cover a temporary budget deficit (cash gap). He appears in connection with the fact that, on the one hand are unevenly distributed taxes, and on the other hand, the fixed costs of the state. And for this reason, from time to time (in the end-the beginning of the quarter) manifests the temporary deficit of the budget to eliminate the issue short-term securities. It may be financial promissory notes, for a period of 60 days circulating in Japan, and promissory notes cash management with a term of 50 days, which are produced in the United States.
3.) Target bonds, produce, in order to implement specific projects. For example, the United Kingdom published for the formation of the necessary money resources on nationalization of transport - and-transport bonds. Japan practices issue construction bonds, which form the cash for large-scale construction.
4.) Securities for the enterprises, which cover the debt to the state. For example, in 1994-1996 such securities have been issued in the Russian Federation in the form of Treasury bills. These Treasury bills, in conditions of deficiency of the budget used by the state as payment for the work, which is performed by the state order and then financed from the Federal budget. Enterprises receiving Treasury bills instead of paying sell them in the secondary market. Those who acquired Treasury obligations, had the opportunity to pay off its debts to the state in these securities (pay taxes).

State securities and definition of their purpose

So, in the world practice, the government securities are the following securities: government bonds, Treasury bills, savings certificates.
Firstly, they are used by the state for the mobilization of savings of citizens of the temporarily free monetary (financial) assets of institutional investors (pension funds, insurance companies, etc.), to Finance the expense of the budget, exceeding his income.
Secondly, with the help of securities is regulated by the monetary circulation.
In the United States, for example, of cash money are made by the Central Bank - the Federal reserve system (FRS) under acceptable collateral, mainly in government bonds. After the SS were placed in the primary market, their handling goes to the secondary market. If it is necessary, the fed is buying them from commercial banks. The outcome of this operation becomes an increase in reserves of commercial banks at the fed. And due to this, the commercial banks an opportunity to issue significant amounts of credits to entrepreneurs. Thus, by changing interest rates on credits and buying of securities and the amount of the issue, the fed regulates the handling of cash.

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