Large long-term loans are risky for the lender, and therefore commanded high interest rates. To reduce their borrowing costs, governments began to issue bonds that were payable to the bearer (rather than the original purchaser) so that the lenders could sell on some or all of the debt to someone else. This innovation reduced the risk for the lenders, and so the government could offer a lower interest rate. Examples of bearer bonds are British Consols and American Treasury bill bonds.
