How does the federal government borrow?
The federal government borrows by issuing securities. Most of the securities that are issued to the public are marketable, meaning that once the government issues them they can be resold by whoever owns them. Marketable debt consists of bills, notes, bonds, Treasury Inflation-Protected Securities (TIPS), and Treasury floating rate notes (FRNs)In 2013, Treasury announced that it would begin issuing Treasury floating rate notes with a 2-year term in early 2014. Treasury floating rate notes are securities that pay a variable rate of interest every 3 months until they mature, which is when they pay their par value. Like traditional Treasury notes, Treasury floating rate notes mature in more than 1 year, but not more than 10 years from their issue date.. These are offered in a wide range of maturities to appeal to the broadest range of investors. Currently, Treasury issues bills with maturities ranging from a few days to 52 weeks; notes with maturities of 2, 3, 5, 7, and 10 years; bonds that mature in 30 years; TIPS with maturities of 5, 10, and 30 years; and FRNs that mature in 2 years. A small portion of securities are nonmarketable, meaning they are registered to the owner and cannot be sold in the financial market. U.S. Savings Bonds are an example.
Marketable Securities Offered by Treasury
Source: Department of the Treasury.