Government Debt Policy

Government debt is one technique of financing government operations but it is not the simply process. Governments can also make money to monetize their debts, thereby removing the required to pay concern. But this practice cleanly reduces government interest costs rather than really canceling government debt, and can result in hyperinflation if used unsparingly. Government debt, identical to sovereign debt, can be issued either in household or foreign currencies. Investors in supreme bonds denominated in foreign currency have trade rate risk: the foreign currency might deflate beside the investor’s home currency.