National debt is the main form of national credit. The central government often issues treasury bonds to make up the national fiscal deficit, or to raise funds for some expensive construction projects, some special economic policies and even wars. Because the national debt is guaranteed by the tax revenue of the central government. So the risk is small, the liquidity is strong, and the interest rate is lower than other bonds.
From the form of bonds, bonds issued in China can be divided into voucher bonds, bearer bonds and book-entry bonds.
Voucher-type treasury bonds are a kind of national savings bonds, which can be registered to report the loss. The creditor's rights are recorded as "voucher-type treasury bonds receipt vouchers", which cannot be listed and circulated, and interest will accrue from the date of purchase. During the holding period, if the holder needs to withdraw cash under special circumstances, he can redeem it at the purchase outlet in advance. When redeeming the principal in advance, the interest shall be calculated according to the actual holding days and the corresponding interest rate grade, and the handling agency shall charge a handling fee according to the repayment of the principal.
Bearer (physical) treasury bonds are a kind of physical bonds, which record creditor's rights in the form of physical certificates, have different face values, are bearer, have no loss report, and can be listed and circulated. During the issuance period, investors can buy directly at the counter of the institution that sells government bonds. Investors who set up accounts in stock exchanges may entrust securities companies to purchase through the trading system. After the issuance period is over, the holders of physical coupons can sell them at the counter, or they can sell them through the trading system after being entrusted to the stock exchange for custody.
Book-entry treasury bonds record creditor's rights in the form of accounting, issuance and trading through the trading system of the stock exchange, and can be registered for loss reporting. Investors who buy and sell book-entry securities must set up accounts in the stock exchange. Because the issuance and transaction of book-entry treasury bonds are paperless, it has high efficiency, low cost and safe transaction.