In a bid to provide a compelling alternative to traditional savings accounts, Belgium has unveiled plans to introduce a one-year government bond. The bond's interest rate is scheduled to be

determined on Tuesday.

Investors purchasing government bonds essentially lend funds to the government. Upon maturity, the government reimburses the borrowed amount along with interest. While government bonds typically have maturities of three, five, eight, or ten years, the Belgian government has opted to issue a one-year voucher.

The primary objective behind the one-year bond is to incentivize banks to elevate interest rates on savings accounts. By presenting a competitive product with appealing returns, Belgium aims to motivate banks to offer their customers improved interest rates on their savings.

The precise interest rate for the bond has yet to be finalized. Finance Minister Vincent Van Peteghem (CD&V, Flemish Christian Democrats) had indicated a net interest rate of 2.71% when announcing the issuance in June.

Belgium intends to launch the bond on 4 September, and individuals can enroll between 24 August and 1 September. Additionally, the withholding tax on the bond will be reduced from 30% to 15%. Photo by  MADe at Dutch Wikipedia.