Concept
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Treasury bills, which are often termed T-bills, are short-term debt instruments that have been issued by a national government. Sometimes the government in question is unspecified, in which case it is assumed to be that of the United States, given the size of their government treasury and economy. As described in the previous video, treasury bills require the payment of the instrument’s par value at its maturity date, the price of which is determined prior to its maturity by market forces in the money market. Thus, this feature also determines the interest associated with the underlying loan. Municipal notes are another type of instrument which is extremely similar to treasury bills; the only significant difference is that the former is issued by a local government instead of one that is national.