The State Bank of Vietnam (SBV) is considering a deadline to stop golddeposit and lending activities in an effort to prevent risks andinsecurity for the domestic market, six months after taking measures torestrict gold trading activities.
A regulation to this effect is expected to be released in May or June.
Ata meeting with commercial banks last week, the SBV emphasised that itsproposed ban on gold deposit and lending activities showed its resolveto fight against “goldenisation” and “dollarisation” in the economy, inorder to raise the local currency’s strength.
According to theSBV, gold deposit and lending activities in the past resulted in goldprice unpredictability and fluctuations, leading to increased goldspeculation and illegal imports, which negatively impacted the monetaryand foreign exchange market and exchange rate.
Moreover, creditorganisations’ gold lending activities mainly focused on thenon-production area, which is excluded from the State’s capitalpriorities.
The ban aims to solve existing shortcomings, ensuringthe best interests of the people and mitigating problems in monetarypolicy, financial and banking expert Cao Si Kiem said.
Accordingto the expert, gold used as a mean of payment has potential risks, dueto ease of speculation in the precious metal and the price can fluctuatequickly.
Commercial banks said the ban will not impact greatlyon their operations, due to the low volume of gold in their reserves.The banks sharply reduced the interest rate for gold deposit rate,popularly standing at 0.3 percent a year since late 2010.
However,according to bankers and financial experts, the SBV decision willfreeze a large volume of assets kept by the people, prevent the use ofthem to serve the economy.
Economist Vu Dinh Anh said about 45percent of people’s money was kept in the form of gold. He suggestedissuance of bonds to mobilise gold in an attempt to increase nationalforeign reserves, helping the government access more capital forproduction and ensuring the interests of the people who still keep gold.
Otherexperts suggested setting up a transaction floor for physical gold inorder to create a legal, transparent playing field for both the generalpopulation and investors./.
A regulation to this effect is expected to be released in May or June.
Ata meeting with commercial banks last week, the SBV emphasised that itsproposed ban on gold deposit and lending activities showed its resolveto fight against “goldenisation” and “dollarisation” in the economy, inorder to raise the local currency’s strength.
According to theSBV, gold deposit and lending activities in the past resulted in goldprice unpredictability and fluctuations, leading to increased goldspeculation and illegal imports, which negatively impacted the monetaryand foreign exchange market and exchange rate.
Moreover, creditorganisations’ gold lending activities mainly focused on thenon-production area, which is excluded from the State’s capitalpriorities.
The ban aims to solve existing shortcomings, ensuringthe best interests of the people and mitigating problems in monetarypolicy, financial and banking expert Cao Si Kiem said.
Accordingto the expert, gold used as a mean of payment has potential risks, dueto ease of speculation in the precious metal and the price can fluctuatequickly.
Commercial banks said the ban will not impact greatlyon their operations, due to the low volume of gold in their reserves.The banks sharply reduced the interest rate for gold deposit rate,popularly standing at 0.3 percent a year since late 2010.
However,according to bankers and financial experts, the SBV decision willfreeze a large volume of assets kept by the people, prevent the use ofthem to serve the economy.
Economist Vu Dinh Anh said about 45percent of people’s money was kept in the form of gold. He suggestedissuance of bonds to mobilise gold in an attempt to increase nationalforeign reserves, helping the government access more capital forproduction and ensuring the interests of the people who still keep gold.
Otherexperts suggested setting up a transaction floor for physical gold inorder to create a legal, transparent playing field for both the generalpopulation and investors./.
