<P> Municipal bonds, "munis" in the United States, are debt securities issued by local governments (municipalities). </P> <P> Governments often borrow money in a currency in which the demand for debt securities is strong . An advantage of issuing bonds in a currency such as the US dollar, the pound sterling, or the euro is that many investors wish to invest in such bonds . Countries such as the United States, Germany, Italy and France have only issued in their domestic currency (or in the Euro in the case of Euro members). </P> <P> Relatively few investors are willing to invest in currencies that do not have a long track record of stability . A disadvantage for a government issuing bonds in a foreign currency is that there is a risk that it will not be able to obtain the foreign currency to pay the interest or redeem the bonds . In 1997 and 1998, during the Asian financial crisis, this became a serious problem when many countries were unable to keep their exchange rate fixed due to speculative attacks . </P> <P> Although a national government may choose to default for political reasons, lending to a national government in the country's own sovereign currency is generally considered "risk free" and is done at a so - called "risk - free interest rate ." This is because the debt and interest can be repaid by raising tax receipts (either by economic growth or raising tax revenue), a reduction in spending, or by creating more money . However, it is widely considered that this would increase inflation and thus reduce the value of the invested capital (at least for debt not linked to inflation). This has happened many times throughout history, and a typical example of this is provided by Weimar Germany of the 1920s, which suffered from hyperinflation when the government massively printed money, because of its inability to pay the national debt deriving from the costs of World War I . </P>

Where does the british government borrow money from