Monetary Policy Report Press Release: December 2017 BOX Monetary Policy Report Implications of the electronics technology life-cycle and the rise of the Internet of Things for Asiaâs exports Developments in the unrated bond market and implications for financial stability
What is the difference between a surety bond and a bank guarantee? Surety bonds are typically conditional whereas bank guarantees are on demand. Only the performance risk lies with the surety, where the bank has the financial risk on the construction project.
How Do Surety Bonds Work? To put it simply, they guarantee that specific tasks are fulfilled. This is achieved by bringing three parties together in a mutual, legally binding contract. The principal is the individual or business that purchases the bond to guarantee future work performance. The obligee is the entity that requires the bond. Obligees are typically government agencies working to regulate industries and reduce the likelihood of financial loss. The surety is the insurance company that backs the bond. The surety provides a line of credit in case the principal fails to fulfill the task.