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# Sinking Fund

## Definition

A dedicated fund established to gradually pay off public debt, typically created
from surplus revenues or savings from reduced interest rates, intended to
accumulate over time for debt reduction.

## Source Chapter

Book V, Chapter 3

## Context

Smith discusses sinking funds as a mechanism for debt reduction that was
sometimes created from savings when interest rates were reduced, though he
notes these funds were often diverted to other purposes.

## Economic Domain

Regulation

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