short-term U.S. government security with maturity ranging from one month to 26 weeks. Treasury bills are usually sold at auction on a discount basis with a yield equal to the difference between the purchase price and the maturity value. In contrast to longer-term government securities, such as treasury notes (with maturity ranging between 1 and 10 years), treasury bills are much more liquid investments (i.e., cash for alternative investments is tied up for shorter periods of time). Because of this high liquidity, the yield rate on treasury bills is normally lower than on longer-term securities. Prices of treasury bills do not usually fluctuate as much as those of other government securities but may be influenced by the purchase or sale of large quantities of bills by the central bank. From 1970 to 1998 the minimum order for treasury bills was $10,000, after which it was reduced to $1,000. In 2001 the U.S. Treasury stopped offering treasury bills with maturities of 52 weeks.

First used extensively during World War I and initially regarded as an emergency source of revenue, bills and other short-term debt instruments have become a permanent element in the public debt of several countries because of their relatively low-interest cost and greater flexibility. Treasury bills are ordinarily held as secondary reserves by commercial banks and by other investors as a means of temporarily employing excess funds.