sinking fund

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sinking fund,

sum set apart periodically from the income of a government or a business and allowed to accumulate in order ultimately to pay off a debt. A preferred investment for a sinking fund is the purchase of the government's or firm's bonds that are to be paid off. Usually the fund is administered by a trustee. See amortizationamortization
, reduction, liquidation, or satisfaction of a debt. The term amortization may also refer to the sum used for that purpose. The term is commonly used in ascertaining the investment value of securities.
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sinking fund

[′siŋk·iŋ ‚fənd]
(industrial engineering)
A fund established by periodically depositing funds at compound interest in order to accumulate a given sum at a given future time for some specific purpose.
McGraw-Hill Dictionary of Scientific & Technical Terms, 6E, Copyright © 2003 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Nearly $12 million of the fund's original $17.5 million was paid out before the sorting of notes even began.(65) In vain the treasurer requested voluntary contributions to the redemption fund equal to an additional 5 percent of circulation.
The Commission agrees to set up an expert group "to deepen the analysis on the possible merits, risks, requirements and obstacles" of setting up a redemption fund and eurobills.
To break the deadlock, the Commission informally agreed to set up an expert group to analyse the legal feasibility of a European Redemption Fund - to part-mutualise government debt - and short-term eurobills.
The last hurdle: the S&D, ALDE and Greens-EFA groups in the European Parliament demand guarantees from the Commission that the mutualisation of debt agenda will move forward.aTo break the deadlock and get the Liberals on board, it is looking more and more likely that aastudy group of experts to analyse the legal feasibility of a European Redemption Fund - to part-mutualise government debt - and short-term eurobills will be set up.aThis option is the only one on the table, according to one source following the talks.
The European Parliament is hammering on about the need to set up a temporary redemption fund to reduce the member states' debt pile.
Austrian Chancellor Werner Faymann has put his weight behind the setting up of a redemption fund at European level to reduce government debt levels.
These comments were no doubt aimed at the leaders of the S&D, ALDE and Greens-EFA groups in the European Parliament, which request commitments towards the setting up of a redemption fund that would part-mutualise government debt and the issuance of short-term eurobills.
The content of its first draft in December, which simply stated that setting up a redemption fund requires a treaty change and can therefore only be a medium-term objective, was deemed insufficient.
In the Commission's opinion, that is the case for setting up a European Redemption Fund, a proper fiscal capacity and short-term eurobills.
Reacting to the European Commission's blueprint to reinforce the Economic and Monetary Union (EMU), ALDE leader Guy Verhofstadt (Belgium) said it would be "a big mistake" to wait five years to have a treaty change to create a European Redemption Fund. He suggests setting up a temporary one outside the treaties and incorporating it in the Union's framework at a later stage.
In a blueprint, European Commission President Jose Manuel Barroso suggests that a European Redemption Fund, a proper fiscal capacity and short-term eurobills - all requiring treaty changes - should be created in the medium term to reinforce the Economic and Monetary Union (EMU).