Government bonds are considered securities that compel the issuer to pay the nominal value of the bond together with agreed interest to the bond holder when the bond maturity expires. This definition is in full accord with the Law on Securities published in the Official Gazette of FRY, No. 26/95, No. 59/98. It is common practice for governments to issue securities in its national bond market that are subsequently traded within that market. This method of financing is most often used by governments of emerging market countries, as it allows the inflow of much needed capital to the emerging economy, and, at the same time, sub- stantial profits.
