Treasury bill

Short-term borrowing issued by a government, repaid at a stated amount on a stated date.

Example

Holding one makes the state your counterparty rather than a bank, so no deposit scheme is involved.

Important

It is not covered by deposit insurance and does not need to be, because the protection is the standing of the issuer itself. That is a different kind of answer to who owes you the money, not a weaker one.

Related terms

• Counterparty risk — The risk that the party on the other side of an arrangement fails to pay what it owes you.
• Issuer — The borrower on the other side of a bond - a sovereign government, a state or municipality, a government agency or a company. The issuer owes the coupons and the par value.
• Maturity — The date on which a bond repays its par value and the contract ends. Bonds are commonly grouped as short, intermediate or long by how far away that date is.
• Money market fund — A fund holding very short-term debt, commonly sold alongside savings accounts as a cash-like holding. You own units in a portfolio rather than a claim on a single bank.

Lessons that explain it

• A deposit is a loan you made to a bank — Money in a savings account is not money you are holding. It is a debt the bank owes you, and what makes it safe is a government guarantee with a limit - not a property of money itself. (9 min)

All 578 terms in the Investing glossary