What are war bonds? How Ukraine will continue to fund armed forces amid ongoing Russian invasion
Ukraine is looking to bolster its armed forces with additional funds
Ukraine will offer war bond to help fund the military as it continues to fightback against Russian invasion.
Bonds will be offered from 1 March as the country attempts to reassure international investors that it will not default on its debt.
Ukraine’s Ministry of Finance tweeted: “In the time of military aggression of the Russian Federation, the Ministry of Finance offers citizens, businesses and foreign investors to support the budget of Ukraine by investing in military government bonds.”
Here’s everything you need to know about how war bonds work.
What is a war bond?
War bonds are debt investments sold by the government with the intention of using funds raised to finance military operations and production during a time of conflict.
The government will often appeal to patriotic sympathies to sell the bonds in wartime.
The bonds are usually offered at a discount and below market value to appeal to a higher number of people.
When have war bonds been used?
Ukraine isn’t the only country who has issues war bonds in a time of conflict.
They have been used by many nations but they became prominent during World War One.
By offering war bonds to the public through retail investors, the general public were likely made aware of them for the first time.
In the US, Liberty Bonds were offered, with citizens encouraged to buy the bonds through patriotic propaganda.
The bonds can also be used by governments to mitigate inflation.
As a government prints more money to fund military operations, inflation grows.
But by offering bonds, the amount of money in the economy is reduced.
How much money has Ukraine made from war bonds so far?
The Ukrainian government has said that each one-year bond will be valued at 1,000 Ukrainian hryvnia, or £24.80.
Despite only releasing war bonds on Tuesday 1 March, Ukraine has so far raised 8.1 billion hryvnia, or around £202,270,000.
Ukraine have stated that they hope to generate around £1bn through the bonds.
The money will go back into the military which is currently fighting off a Russian invasion.
Alongside the bonds, Ukraine is set to receive financial and military support from the European Union.
It comes as the Russian economy continues to suffer after nations across the world slapped monetary sanctions on the country and individuals.
Sanctions of the US, UK, and European Union saw the Russian rouble fall by almost 30%, while Moscow’s stock market was closed for a second day on 1 March as the market continued to crash.
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