Parliamentary Replies
Published Date: 27 February 2024

Written reply to Parliamentary Question on Treasury bills

Date: For Parliament Sitting on 27 February 2024

Name and Constituency of Member of Parliament

Mr Leong Mun Wai, NCMP


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 PQWritten 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. 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.