Bearer Bond

bearer bond

A bearer bond is a debt security issued by a business entity, such as a corporation, or by a government. It differs from the more common types of investment securities in that it is unregistered – no records are kept of the owner, or the transactions involving ownership. Whoever physically holds the paper on which the bond is issued owns the instrument. This is useful for investors who wish to retain anonymity. Recovery of the value of a bearer bond in the event of its loss, theft, or destruction is usually impossible.

Bearer bonds have historically been the financial instrument of choice for money launderers, tax evaders, and those just generally trying to conceal business transactions. In response, new issuances of bearer bonds were banned in the United States in 1982. All the bearer bonds issued by the U.S. Treasury have matured. They no longer pay interest to the holders. As of May 2009, the approximate amount outstanding is $100 million.  Bearer bonds are still used in some parts of the world, notably in Central America.

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