Singapore MAS Chairman Lawrence Wong on Why 6-Month & 1-Year Treasury Bills Issued by Government with Higher Interest Rates than Fixed Deposits Rates
Deputy Prime Minister, Minister of Finance, Deputy Chairman of the MAS Board Lawrence Wong Caproasia.com | The leading source of data, research, information & resource for financial professionals, investment managers, professional investors, family offices & advisors to institutions, billionaires, UHNWs & HNWs. Covering capital markets, investments and private wealth in Asia. How do you invest $3 million to $300 million? How do you manage $20 million to $3 billion of assets? Caproasia - Learn more Caproasia Access | Events | Summits | Register Events | The Financial Centre The 2024 Investment Day | 2024 Family Office Summits | Family Office Circle This site is for accredited investors, professional investors, investment managers and financial professionals only. You should have assets around $3 million to $300 million or managing $20 million to $3 billion. 
Singapore MAS Chairman Lawrence Wong on Why 6-Month & 1-Year Treasury Bills Issued by Government with Higher Interest Rates than Fixed Deposits Rates by Banks: T-Bills Auctioned with Demand from Singapore & Overseas and Reflecting Direction of Interest Rates in Global Markets, Fixed Deposit Rates are Determined by Funding Needs of Banks, Loan Demand & Competition in Market, Singapore Major Banks Fixed Deposit Rates for 6 Months at 3% & 12 Months at 3.5%, Singapore T-Bills 6 Months at 3.66% & 12 Months at 3.45% 1st March 2024 | Hong Kong
Singapore central bank Monetary Authority of Singapore (MAS) Lawrence Wong (Chairman, Singapore Deputy Prime Minister, Minister for Finance) reply on why 6-month & 1-year Treasury Bills issued by Singapore government with higher interest rates than fixed deposits rates by banks – T-bills auctioned with demand from Singapore & overseas and reflecting direction of interest rates in global markets, while fixed deposit rates are determined by funding needs of banks, loan demand & competition in market. Singapore major banks fixed deposit rates for 6 months at 3% and 12 months at 3.5%. Singapore T-bills 6 months at 3.66% and 12 months at 3.45%. Singapore MAS Chairman Lawrence Wong: “The yields on T-bills are determined via competitive auctions in a market that comprises individuals and institutions from Singapore and overseas. They therefore reflect the general level and direction of interest rates in global markets. Over the past two years, yields on T-bills have increased alongside comparable instruments such as US Treasuries, as central banks globally raised interest rates to combat inflationary pressures. As T-bill yields increased, retail investor demand has also strengthened. Allotments to retail investors have grown from around 13% of each issuance in 2022 to around 46% of each issuance in 2024 … … Fixed Deposit (FD) interest rates are determined by the funding needs of banks, competition in the market, and deposit growth relative to loan demand. Indeed, FD rates have increased over the past two years, alongside higher demand for T-bills. Based on published information from the major retail banks, depositors can earn interest of up to 3.0% and 3.5% on 6-month and 12-month FDs. This compares with the 3.66% and 3.45% yield for the most recent auction of T-bills of similar tenors.”
“ Singapore MAS Chairman Lawrence Wong on Why 6-Month & 1-Year Treasury Bills Issued by Government with Higher Interest Rates than Fixed Deposits Rates by Banks: T-Bills Auctioned with Demand from Singapore & Overseas and Reflecting Direction of Interest Rates in Global Markets, Fixed Deposit Rates are Determined by Funding Needs of Banks, Loan Demand & Competition in Market, Singapore Major Banks Fixed Deposit Rates for 6 Months at 3% & 12 Months at 3.5%, Singapore T-Bills 6 Months at 3.66% & 12 Months at 3.45% “
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Singapore MAS Chairman Lawrence Wong on Why 6-Month & 1-Year Treasury Bills Issued by Government with Higher Interest Rates than Fixed Deposits Rates by Banks
Deputy Prime Minister, Minister of Finance, Deputy Chairman of the MAS Board Lawrence Wong
For Parliament Sitting on 27 February 2024
Name and Constituency of Member of Parliament
Mr Leong Mun Wai, NCMP
Question:
To ask the Prime Minister what are the main reasons for 6-month and 1-year Treasury bills issued by the Government to bear higher interest rates than fixed deposits of the same respective maturity offered by commercial banks.
Answer by Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, and Chairman of MAS:
1. My response to this question will also address the other written PQ [1] filed by Mr Leong Mun Wai for today’s Sitting.
2. The yields on T-bills are determined via competitive auctions in a market that comprises individuals and institutions from Singapore and overseas. They therefore reflect the general level and direction of interest rates in global markets. Over the past two years, yields on T-bills have increased alongside comparable instruments such as US Treasuries, as central banks globally raised interest rates to combat inflationary pressures. As T-bill yields increased, retail investor demand has also strengthened. Allotments to retail investors have grown from around 13% of each issuance in 2022 to around 46% of each issuance in 2024.
3. Retail investors can subscribe to Singapore Government Securities (SGS), including T-bills through local banks’ physical ATMs and online banking channels. In 2023, MAS and CPF Board worked with agent banks to digitise the CPF-Investment Scheme – Ordinary Account (CPFIS-OA) application process. This has made it significantly easier for retail investors to participate in T-bills auctions using their CPF-OA balances.
4. Fixed Deposit (FD) interest rates are determined by the funding needs of banks, competition in the market, and deposit growth relative to loan demand. Indeed, FD rates have increased over the past two years, alongside higher demand for T-bills. Based on published information from the major retail banks, depositors can earn interest of up to 3.0% and 3.5% on 6-month and 12-month FDs. This compares with the 3.66% and 3.45% yield for the most recent auction of T-bills of similar tenors.
[1] Written PQ from Mr Leong Mun Wai for the Parliament Sitting on or after 27 February 2024: Mr Leong Mun Wai: To ask the Prime Minister (a) for each year since 2022, what is the amount and percentage of Treasury bills that were allotted to retail investors; and (b) whether the Monetary Authority of Singapore plans to take any steps to promote this investment instrument among retail investors.
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