The Nature of Government Securities and its Origin

Abstract

In this research, we have studied the nature and the origin of a government security paper as tradable debt instrument issued by a national government to borrow money from investors. As a rule it is a formal promise to repay the principal at a fixed maturity date. Because it is backed by the government's taxing and borrowing power, it is generally regarded as low-risk and useful instrument to cover budget deficit, stimulate economic growth, but also may create financial instability and risk of default.