The State Bank of Vietnam is likely to double its charter capital to 10 trillion VND (476.2 million VND) from August 15 this year in a bid to better stabilise the country’s monetary market, according to a draft circular.

It the increase goes ahead, the Fund for National Monetary Policies will also be doubled as the draft states that the fund must be equal to the SBV’s charter capital.

The SBV will be allowed to use the fund to stabilise the country’s monetary market. Besides addressing the threat posed by credit institutions that fail and damage the banking system, the SBV can also use the fund to contribute capital to or buy stocks of credit institutions that are put under SBV’s special control due to weak finances.

Deposit Insurance of Vietnam will also be allowed to borrow from the fund to maintain the stability of credit institutions in case other funds are not available for payment.

With the charter capital’s increase, the SBV will likely have to set aside double provisions for the Fund for National Monetary Policies to 20 percent of annual difference between the central bank’s revenues and expenses.

According to the draft, SBV will still maintain 10 percent of its annual revenue expense difference for the financial provision fund, but it will not be allowed to exceed 25 percent of the central bank’s charter capital.
The SBV will report the fund’s revenues and expenses to the Ministry of Finance every quarter.-VNA