Treasury bills for sale!!!
T-Bills can provide lots of benefits to investors and fund managers
MMA has started brokering the sale of treasury bills of the central government. “Treasury bills (or T-bills) mature in one year or less. Like zero-coupon bonds, they do not pay interest prior to maturity; instead they are sold at a discount of the par value to create a positive yield to maturity”. Treasury Bills have been used for centuries by governments not only to finance government debt, rather it has many other financial benefits and can be used for several other purposes.
A handy tool for fixing a lot of problems in economy
For an investor, Treasury bills can be regarded as the safest ( technically risk free) alternative for investing. It is guaranteed by the Central Government and has virtually no risk. All other investments options including buying shares, private equity, doing a business are all highly risky compared to treasury bills. Those investors usually looking for stable income and low risk such as the pensioners, government institutions, various NGOs can utilize treasury bills to park their excess cash and earn a good return.
As a tool to manage the economy, Treasury bills act as an indicator of cash rate. It gives signals to the market about the ideal market rate for deposits and lendings. If tendered properly and the rate determined purely on supply and demand, it will drive the interest rates determined by the Banks. Hopefully we will be able to obtain finance cheaply with the introduction of proposed amendment to issuing policies as to open the market for private individuals and companies.
Finally something good
I have been concerned about the “Sleeping Watchdog” for quite sometime now. So far, in my opinion, This is the best step taken by the governor to stabilise our economy. I hope that this is a beginning of a series of events past due to be taken to strengthen our financial system. Opening up the foreign currency market, strengthening the laws, establishing a credit information bureau, encouraging use of electronic methods of payments, harmonising the payment systems of all commercial banks are yet some basic steps to be taken to develop our financial system. I hope these will be done sooner than later.
