​​Plea for a balanced government bond​

Stay up to date with the latest measures from the financial sector

24 January 2024 - 7 min Reading time

The government bond is an instrument that is used by the Government to raise funds and to finance debt. Hence, the amount that is raised depends on the financial requirement of the government at the time of the issue. As in the past, the sector will always proceed in a constructive manner and make every effort to help the clients during the subscription period of new issues. 

That’s why we want to draw the attention to some areas of concern regarding the one-year government bond that was issued in September 2023. 

  • The government bond was presented as the alternative for a savings account, while it is in fact not a savings product, but an investment. A clear communication is vital to inform and protect the client. 
  • The one-year government bond was launched with a lower fiscality than comparable investment products (15% withholding tax instead of 30% withholding tax). This caused an uneven playing field for investors as well as issuers. 
  • The government bond was issued without a maximum amount to be collected, which disregarded the financing requirements of the Belgian State and resulted in an unexpected liquidity test for the banks.  

We advocate that a potential new one-year government bond in March complies with corporate governance principles, is based on a long-term economic vision and takes into account the budgetary concerns. 


First one-year government bond  


The previous one-year government bond, that was issued in September 2023, caused a major shift in deposits. EUR 21.9 billion was subscribed. This had a big impact on regulated savings and, thus, on the way Belgian banks finance themselves. 

The government chose to place the product on the market as an alternative for regulated savings, in order to encourage banks to offer higher returns on savings. 

Each bank assesses individually which fee it is willing to offer on the savings that it holds, and will adjust its pricing based on its risk assessment and balance sheet. As such, there have been several waves of interest rate hikes since the start of the discussion about the government bond before the summer of 2023. This will especially be noticeable for the customers in the second half of 2024, thanks to the payment of the loyalty premium after savings have stayed on the account for 12 months. The savers will then take advantage of higher returns, at a time when the market interest rates are expected to have decreased again. The mechanism of the unique Belgian fidelity premium provides protection to Belgian savers in a context of falling interest rates. 


Equal rules for all 


The government bond is a part of what banks offer. It is a product that allows people to take the first steps in investments, for instance, and it constitutes an interesting diversification. Therefore, it is important to ensure equal rules for everyone in terms of taxation. This was not the case when the previous one-year government was issued, as the withholding tax was halved to 15 percent. If a company or a bank issues a product (e.g. a bond, savings certificate or term account) with the same maturity, this product has to comply with the same tax conditions. We hope this principle will be respected when a new government bond is issued. 


Protection of the customer and the society 


The banks are legally obliged to offer their customers a product that meets their needs and expectations, and to provide the customer with all the necessary information about this product. This customer protection is partly ensured through the MiFid rules. Investors don’t enjoy this kind of protection when they subscribe directly through the Debt Agency. This also applies to the obligation of banks to identify their customers and the origin of invested assets as part of the anti-money laundering legislation. 


Prudent person rule 


A balanced government bond fits within a long-term economic vision for our country. 

In this regard, the government’s first priority is the amount it wishes to raise, within the known annual budget, and it must do so on the financial terms it considers best in the interest of all citizens. In September 2023, an issue with a longer maturity on the financial markets would have made it possible to raise money more advantageously for a longer period of time. 

The amount of money to be raised for the State and the financial conditions are of paramount importance when deciding on a new government bond. In that respect, it is vital to keep in mind that short-term interest rates are expected to fall in the next months. In that case, it would be interesting to raise a significant part of the necessary short-term debt in the second half of the year, and now only raise a limited amount, that is defined in advance and communicated to the market


Financial stability as a starting point   


The government bond of September 2023 generated a major shift in deposits (EUR 21.9 billion) and could be considered as an unexpected liquidity test for the banking system. When issuing the new government bond, attention should be paid to the financial stability. Another similar issue would further affect the liquidity buffers and risk making some banks less resilient. The strong liquidity position of the Belgian financial sector proved its worth at the beginning of 2023 during the banking crisis in the US and Europe. 




The Belgian banks want to play their full part in supporting a sustainable economy, both through offering a government bond to their customers, providing savings and investment products, and lending to families, businesses and the government. The banks wish to continue doing so and expect the government to opt for issuing a new one-year government bond in a balanced manner, based on the needs of the Belgian state and with an equal tax treatment. This will make it possible to correctly inform and protect investors, guarantee the liquidity and stability of the banking sector and finance the Belgian debt in the most optimal way.