The ultimate source of governing authority, traditionally understood as a nation-state or government with the power to make laws, tax, regulate, borrow, and act independently within its jurisdiction. In finance, a sovereign borrower typically refers to a national government that issues debt, such as U.S. Treasury securities. The United States is somewhat unique, however, in that sovereignty ultimately rests with the people, who delegate limited powers to government through the Constitution. Sovereign governments may have extraordinary powers, but they remain constrained by law, markets, political legitimacy, and economic reality.
« Back to Glossary IndexSovereign
« Back to Glossary Index
