The secondary market in Californian-issued IOUs is set for a boost after the Securities and Exchange Commission ruled that the notes were tradeable securities under US federal law.

California is printing $3bn (€2.15bn, £1.85bn) of IOUs for businesses, individual taxpayers and local counties in lieu of cash. It has sent more than $100m of the notes to, among others, court-appointed attorneys, county-run health schemes and taxpayers awaiting rebates. IOUs will continue to be issued until Arnold Schwarzenegger, California’s governor, and the state legislature agree a budget deal.