full faith and credit

Definition

A government's unconditional guarantee to honor debt obligations using its taxing power, theoretically the safest backing possible. 'We'll tax citizens into oblivion before we default' in more dignified language.

Example Usage

U.S. Treasury bonds are backed by the full faith and credit of the federal government, making them the global benchmark for risk-free rates.

Origin

Constitutional and legal terminology referring to government's ultimate guarantee power.

Fun Fact

Only general obligation bonds carry full faith and credit backing; revenue bonds are backed only by specific project revenues, making them riskier.

Source: Municipal and sovereign debt markets

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debtor

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