1. What is national debt?
Before understanding the national debt, we need to master the concept of national debt. Government bonds refer to the creditor's rights and debt certificates issued by the government finance department or other institutions in the name of the government to raise funds and promise to pay interest and repay the principal within a certain period of time. National debt has the characteristics of high security, strong liquidity and stable income because of its high credit rating, large circulation and good market attributes. In addition, most countries stipulate that income from purchasing government bonds can enjoy tax-free treatment. For government bonds, bonds issued by the central government are called central government bonds or government bonds, and bonds issued by local governments are called local government bonds.
Therefore, the national debt is a kind of government bond issued by the central government to raise financial funds. Under normal circumstances, national debt is a bond based on national credit, which is issued to investors by the central government through legal procedures and channels and promises to repay the principal and interest at maturity.
In layman's terms, national debt can be understood as an iou issued to the public when the government needs to raise financial funds, and clearly tell the public what the interest on this iou is, and promise to repay the principal and interest after the expiration. This IOU is a national debt. Because the issuer of national debt is the country, it often has high credibility in the bond market. Generally speaking, national debt is recognized as the safest investment tool, which attracts investors' attention.
Second, the purpose of issuing government bonds
Raise construction funds
In the process of infrastructure and public facilities construction, the state needs a lot of medium and long-term funds. By issuing medium and long-term treasury bonds, some short-term funds can be converted into medium and long-term funds, which can be used to build large-scale national projects and promote economic development.
Make up the fiscal deficit
In order to make up the fiscal deficit, the state often borrows money from the central bank, increases taxes and issues treasury bonds.
Issuing and borrowing government bonds
Borrowing national debt is issued to repay the due national debt. At the peak of debt repayment, in order to solve the problem of the source of debt repayment funds, the state issues borrowed and exchanged treasury bonds to repay the old debts due, which can reduce and disperse the debt repayment burden of the state.
Increase military spending
In turbulent times, military expenditure is huge, and when there is no other way to raise funds, it is to raise funds by issuing war bonds.
Three. Types of national debt
According to the above classification of fund use, national debt can be divided into deficit national debt, construction national debt, war national debt and special national debt. Among them, special national debt refers to the national debt issued by the government in order to implement a special policy.
According to the classification of repayment period, national debt can usually be divided into fixed-term national debt and irregular national debt. Among them, fixed-term treasury bonds refer to treasury bonds issued by the state with strict terms of debt service, which can be divided into short-term treasury bonds, medium-term treasury bonds and long-term treasury bonds.
Short-term national debt usually refers to the national debt with a repayment period of less than one year, which is mainly used to adjust the temporary surplus and deficiency of the treasury capital turnover and has great liquidity; Medium-term national debt refers to the national debt with a repayment period of more than 1 year and less than 1 year (including1year but excluding1year), which can make the country's use of debt funds relatively stable because of the long repayment time; Long-term national debt refers to the national debt with a repayment period of more than 10 years (including 10 years), which enables the government to control its financial resources for a longer period of time, but the holder's income will be affected by currency value and price. Irregular national debt refers to the national debt issued by the state with no repayment period. Holders of such bonds can get interest on schedule, but they have no right to pay off their debts, such as perpetual bonds issued by Britain.
According to the forms of bonds, China's national debt can be divided into two categories: savings bonds and book-entry national debt. Savings bonds refers to the debt certificate issued by the Ministry of Finance, fixed in coupon rate and recorded by paper or electronic means. Book-entry treasury bonds are creditor's rights and debt certificates issued by the Ministry of Finance. They are issued without paper, recorded by electronic bookkeeping, and can be listed, circulated and transferred. In the next article, we will summarize the characteristics and differences between savings bonds and book-entry treasury bonds in detail. /img/202 107 15/2758 a 568 AE 5 ff 539 e 938 b 0 cf 96d 8 aa 23 . jpg