Spore's bank interest rates are controlled by MAS & that's why you will never get as high a rate found in other countries. Even during the boom years one could get higher interest outside of Spore. Even with todays low interest rates you can still get a higher rate outside Spore.
When interest rates were 12%+ Sporeans must have lost big time on interest held in our CPF accounts:(
Singapore's bank interest rates are NOT controlled by MAS. Two commonly used reference rates are SIBOR (Singapore Interbank Offered Rate) and SOR (Swap Offer Rate). Both are fixed by ABS (Association of Banks in Singapore).
From these two, each bank then set their own board rate.
For layman, we will notice different banks offering different interest rates for the same deposit period and with different promotional terms if any at different time.
As for the CPF interest rates, this is extracted from CPF website:
Interest Rate for Ordinary Account Monies
For Ordinary Account (OA), CPF members receive a market-related interest rate based on the 12-month fixed deposit and month-end savings rates of the major local banks.
The computed CPF interest rate, derived from the major local banks’ interest rates for the three-month period, 1 August 2012 to 31 October 2012, worked out to be 0.21% per annum. As this is below the legislated minimum of 2.50% per annum, the OA interest rate for January 2013 to March 2013 will remain unchanged at the legislated minimum of 2.50% per annum.
Interest Rate for Special and Medisave Account Monies
Savings in the Special and Medisave Account (SMA) currently earn either 4% or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, whichever is the higher. The interest rate on SMA savings is adjusted quarterly, based on interest rates on 10YSGS over a preceding 12-month period.
The average yield of the 10YSGS plus 1%, from 1 December 2011 to 30 November 2012, works out to be 2.49%. Accordingly, the SMA interest rate payable to CPF members from 1 January 2013 to 31 March 2013 will be maintained at the current floor of 4%.
Why just add 1% to 10YSGS? Why not just benchmark it to say 30 years SGS? The yield spread may be more than just that 1%. In view of the extended period where one can withdraw their CPF, if one start working at 20 and retires at 55, that is a good 35 years!! If one were to stop at 65 years old, that is 45 years!!
So why just 10 years SGS + 1%? Don't try to look generous with that +1%.
Similarly for Ordinary accounts, why use the short term 12 month rate? The money are stuck in the CPF except for housing withdrawal. Even for investment, there is a cap. So why shortchange us those money that are stuck?
And yes, those 2.5% and 4% base rates were legislated when the interest rates were much higher. Don't ever think the government is doing any charitable work. Fat hope. When it was legistated at that time, they thought the base rates would not likely to happen. Now they are stuck not because they take care of CPF account holders.
p/s The last para above is to pre-empt people like Kinana, Cass888 and those of the PAP IB to claim how good the government has been. Sorry, not with me.