Economy and interest rates · updated October 21, 2026
What are government bonds and how do they work
A government bond is a loan you make to the state: you give it money now, and it pays you fixed interest and returns the money on a set date. The best known are US Treasuries; in Romania, for example, the government sells two types to individuals, Tezaur and Fidelis.
How it works
The finance ministry or treasury announces issues regularly, each with its rate and maturity. US Treasuries come as bills (up to a year), notes (2-10 years) and bonds (20-30 years); Americans can buy them directly through TreasuryDirect, and anyone can buy them through a broker or a bond ETF. Germany's equivalent is the Bund. In Romania, Tezaur is bought at post offices, Treasury units and online, and is held to maturity, while Fidelis is bought through banks and brokers and then listed on the Bucharest Stock Exchange, where it can be sold at any time, at the market price.
Worked example
You buy $10,000 of government bonds paying 4% a year (the numbers are an example).
At maturity you get the $10,000 back. Interest is usually paid once or twice a year, on the dates in the terms of the issue.
Worth knowing
Bonds issued by a government in its own currency are among the safest investments in that country: the state pays its domestic debt before almost anyone else. The main risk is inflation running higher than the interest rate.
When government bonds can fool you
Tradable bonds sell at the day's price: if rates have risen in the meantime, the market price can be below what you paid. Some bonds lock your money in: read the terms to see what happens if you need the money before maturity. Bonds in a foreign currency carry currency risk on top of everything else.
Related terms
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Questions about government bonds
Are government bonds guaranteed?
They are the government's debt, so they are as safe as the government. They are not covered by deposit guarantee schemes, because they are not bank deposits.
How do I buy US Treasuries from Europe?
The simplest way is through a UCITS ETF on US government bonds, bought from a broker. Some brokers also let you buy individual Treasuries.
What is the difference between Tezaur and Fidelis?
Both are Romanian government bonds for individuals. Fidelis can be sold on the stock exchange before maturity; Tezaur cannot. Their rates differ from one issue to the next.
These explanations are for information only. They are not a recommendation to buy or sell.
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