Full faith and credit,
Definition of Full faith and credit:
Full faith and credit is a phrase used to describe the unconditional guarantee or commitment offered by an entity to back the interest and principal of another entity's debt. The full faith and credit commitment is typically employed by a government to help lower borrowing costs of a smaller, less stable government or of a government-sponsored agency.
Full borrowing and taxing power of a government (which, if necessary, can print money to pay its debts) pledged for the full and timely satisfaction of its obligations.
Full faith and credit refers to the full borrowing power of a government that pledges to fulfill its payment obligations in a timely manner. The U.S. Treasury issues bills, notes, and bonds as a means of borrowing money from the public to fund the government’s capital projects.
How to use Full faith and credit in a sentence?
- Governments offer issue bonds backed only by their ability to collect taxes and other revenues in the future.
- Full faith and credit is an unsecured method of backing debt based on trust and reputation.
- Because governments theoretically have the unlimited and lawful capacity to collect revenue, these bonds are often considered low-risk, and thus carry lower yields.
Meaning of Full faith and credit & Full faith and credit Definition