Treasury bills — what they are and how they work

What are treasury bills?

Treasury bills (T-bills) are short-term debt securities issued by the Treasury. They have a maturity period of up to 1 year (most commonly 13, 26 or 52 weeks).

Treasury bills are considered among the safest financial instruments — the state is the guarantor.

Quick Answer

Treasury bills (T-bills) are short-term debt securities issued by the Treasury with a maturity of up to 1 year (commonly 13, 26 or 52 weeks), considered among the safest instruments because the state guarantees them. They pay no coupons — sold at a discount below nominal value, your profit is the difference repaid at maturity. In Poland they are issued by the Ministry of Finance at NBP auctions with a 10,000 PLN minimum, so individuals usually gain exposure indirectly via money market funds. This is educational information, not investment advice.

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How do treasury bills work?

Treasury bills are sold at a discount — you buy them below nominal value, and on maturity date you receive the full amount. The difference is your profit.

Example:

• Nominal value: 10,000 PLN
• Purchase price (with discount): 9,700 PLN
• Profit after maturity: 300 PLN (3.09% for the period)

Bills don't pay coupons — all profit comes from the discount.

Treasury bills in Poland

In Poland, treasury bills are issued by the Ministry of Finance. They are sold at auctions organized by NBP (Polish National Bank). Minimum nominal value is 10,000 PLN, which makes them accessible mainly to institutions and wealthier investors.

Individual investors can gain exposure to treasury bills indirectly — through money market funds that invest in T-bills, among others.

Treasury bills vs government bonds

When to consider treasury bills?

• You're looking for safe cash parking for a short period
• You expect interest rate increases (short term = lower risk)
• You need a liquid instrument without credit risk

For most individual investors, a money market fund or savings bonds are a more convenient alternative.

How can Freenance help

Freenance tracks all your assets — including money market funds investing in treasury bills. You'll see how the safe part of your portfolio affects your overall Runway and allocation.

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FAQ

What is the typical maturity of treasury bills?

Treasury bills are short-term debt instruments, usually issued with maturities of 13, 26 or 52 weeks. Their short tenor is the main reason they carry very limited interest-rate risk compared with longer-dated bonds.

How is the return on a treasury bill calculated?

Treasury bills are sold at a discount to face value and do not pay coupons. The investor's return equals the difference between the purchase price and the nominal amount received at maturity, expressed as a yield for the holding period.

Can individual investors in Poland buy treasury bills directly?

In Poland, treasury bills are sold at NBP auctions with a high minimum nominal value (commonly 10,000 PLN), which in practice limits direct access mostly to institutions. Individuals usually gain indirect exposure through money market funds that hold T-bills.

Are treasury bills risk-free?

They are considered among the safest instruments because they are backed by the sovereign issuer, but no investment is truly risk-free — credit, inflation and reinvestment risks still exist. Holding to maturity removes price risk but not the impact of inflation on real return.

How do treasury bills compare with retail savings bonds?

Retail savings bonds (such as Polish OTS, ROR or DOS) are designed for individuals, have low minimum amounts and pay periodic coupons. Treasury bills offer shorter maturities and a discount structure, but with a much higher entry threshold and less convenient access.

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