Access to the federal government's new investment product is online and only possible via Austria ID. Shorter term, higher interest. The product was discontinued in 2020.
Private investors are also now able to buy bonds directly from the government. The federal government's new investment product “Bundesschatz” can be purchased online www.bundesschatz.at – But you must register with ID Austria with full functionality. You can join for just 100 euros, and there are no costs or account management fees. Interest rates currently range from 2.50 to 3.50 percent depending on tenure.
The so-called Federal Treasury is considered a savings instrument, with which you can buy Austrian government bonds from the federal government – that is, without having a bond account in a bank. Such a product existed earlier (since 2002) but was discontinued in 2020 considering the low interest rate environment at the time.
Finance Minister Magnus Bruner (ÖVP) said at a new investment product presentation on Monday that there were already discussions with banks a few months ago about whether rising interest rates should be passed on to savers. “This is one of the reasons why we as the Ministry of Finance together with the OeBFA decided to create an additional offer, a secure offer, a more attractive offer for savers. That's why we updated the Federal Treasury,” he said, adding that he expects banks and insurance companies to follow suit and use ID in the identification process.
New interest rates every day
As the federal treasury is directly valued by the central government, deposit insurance is not required, explained Markus Styx, managing director of the Austrian Federal Financing Agency (OeBFA). It is the safest investment in Austria. “The Federal Treasury is a security issued by a safe issuer in Austria, the Republic standing behind all its assets.”
“The interest rates for the respective terms are fixed daily and are based on the current market interest rates. The interest rate is always fixed for the entire period chosen, which means it cannot be changed,” Stix explained. Interest depends on the respective period. Currently, the interest rate is 3.50 per cent for one month and 2.50 per cent for ten years. The market currently has an inverted interest rate curve, which means investors earn higher interest rates on short-term investments than on long-term investments.
Different terms, different interest rates
When it comes to terms, customers can choose between classic federal rates with one month (3.50 percent interest), twelve months (3.00 percent) and ten years (2.50 percent). Anyone who wants to invest their money in a particularly sustainable way can buy Green Federal Treasuries with tenors of six months (3.25 percent) and four years (2.75 percent). “With green federal funds, as opposed to the classic model, the money is invested exclusively in green projects,” Brunner explained. “Funds here are dedicated and used exclusively to finance green spending and government investments, such as expanding rail infrastructure or implementing a green energy transition.”
You can choose a shorter term with a higher interest rate and decide online immediately before the term expires whether you want to pay the money or reinvest.
Brunner is still sticking to his proposal for a capital gains tax (CGT) exemption with a retention period. “I have been fighting till the last day for capital gains tax exemption for pension warehouse. After a certain retention period, one can certainly think about it and incorporate the federal treasury into the overall package. For example, you can combine it with green products.” He has yet to get a majority in parliament in favor of it, although there is room for doubt and the opinion has been modified several times. The retention period is now ten years, “which has nothing to do with speculation.” (APA)
