Gold bars will be banned on the free market and gold trading tightly controlled under Government Resolution 11/NQ-CP recently issued to stabilise the macro-economy.
The State Bank of Vietnam has been asked to submit to the Government a decree on the management of gold-trading activities that would gradually stop gold bars trading on the unofficial market.
The resolution also said that gold smuggling across the border must stop.
Following the announcement, local gold prices dropped by 150,000 VND per tael (1 tael equals 1.2 Troy ounces).
An official from the central bank, who declined to be named, said under the proposed decree, gold shops would not be allowed to trade gold bars, except for jewellery gold.
Buying bars would become more difficult, but those owning gold bars could continue to do so but could only sell gold at outlets designated by the central bank, he said.
"The draft decree will be presented to the Government by the second quarter before guiding documents were issued," the official said.
The bank official said the effective date of the decree would be considered carefully so a transitional period would be taken into account.
A statement from the central bank said tough measures had been adopted because the accumulation of gold was not benefiting the economy.
Instead, it was increasing gold prices and the VND/US dollar exchange rate.
Gold prices have affected dollar prices over the past 10 years, when the demand for gold soared due to speculators buying gold to pay debts.
In addition, gold smugglers would amass US dollars to illegally import gold while dollar traders would take advantage of this opportunity to drive dollar prices higher.
Also, the prices of US dollars sold on the local market did not rise when domestic gold prices equalled world gold prices.
When domestic gold prices were far higher than world prices, US dollar prices would climb.
The central bank said tightening gold-bar trading activities and measures to stabilise the market would help change people's habits and mobilise large amounts of idle funds to serve business and production.
Excluding the volume of gold being smuggled across the border, gold traders said around 700 tonnes of gold or 28 billion USD worth was being held by the public, an equivalent of one-fourth of the total capital mobilised by the economy.
The policy to limit and gradually remove gold bars from the market should be in line with measures to mobilise these idle funds which people hold onto for financial security, according to gold trading firms.
The chairman of the National Financial Supervision Committee, Le Duc Thuy, said the draft decree by the central bank to manage gold-trading activities should be considered cautiously.
They should calculate the amount and value of gold bars that have been supplied to the market, assess the effect of this on the monetary market, particularly the forex one, and then formulate specific measures to control gold trading, he said.
Tran Thanh Hai, general director of the Vietnam Gold Business and Investment Joint Stock Company, said he proposed a specific roadmap on solutions to manage the gold market.
He said certain factors should be considered, including how to handle several hundred tonnes of gold held by the public, the status of legal ownership of gold bars, and the setting of gold prices.
To meet demand for gold investment among the public, authorities should conduct research with the aim of setting up an official gold-trading floor, which would collect fees and be strictly supervised.
The Government resolution guiding the foreign-exchange decree said that gold bars were gold that had been processed into bars in different shapes, bearing numbers representing quantity and quality and the producers' codes./.
The State Bank of Vietnam has been asked to submit to the Government a decree on the management of gold-trading activities that would gradually stop gold bars trading on the unofficial market.
The resolution also said that gold smuggling across the border must stop.
Following the announcement, local gold prices dropped by 150,000 VND per tael (1 tael equals 1.2 Troy ounces).
An official from the central bank, who declined to be named, said under the proposed decree, gold shops would not be allowed to trade gold bars, except for jewellery gold.
Buying bars would become more difficult, but those owning gold bars could continue to do so but could only sell gold at outlets designated by the central bank, he said.
"The draft decree will be presented to the Government by the second quarter before guiding documents were issued," the official said.
The bank official said the effective date of the decree would be considered carefully so a transitional period would be taken into account.
A statement from the central bank said tough measures had been adopted because the accumulation of gold was not benefiting the economy.
Instead, it was increasing gold prices and the VND/US dollar exchange rate.
Gold prices have affected dollar prices over the past 10 years, when the demand for gold soared due to speculators buying gold to pay debts.
In addition, gold smugglers would amass US dollars to illegally import gold while dollar traders would take advantage of this opportunity to drive dollar prices higher.
Also, the prices of US dollars sold on the local market did not rise when domestic gold prices equalled world gold prices.
When domestic gold prices were far higher than world prices, US dollar prices would climb.
The central bank said tightening gold-bar trading activities and measures to stabilise the market would help change people's habits and mobilise large amounts of idle funds to serve business and production.
Excluding the volume of gold being smuggled across the border, gold traders said around 700 tonnes of gold or 28 billion USD worth was being held by the public, an equivalent of one-fourth of the total capital mobilised by the economy.
The policy to limit and gradually remove gold bars from the market should be in line with measures to mobilise these idle funds which people hold onto for financial security, according to gold trading firms.
The chairman of the National Financial Supervision Committee, Le Duc Thuy, said the draft decree by the central bank to manage gold-trading activities should be considered cautiously.
They should calculate the amount and value of gold bars that have been supplied to the market, assess the effect of this on the monetary market, particularly the forex one, and then formulate specific measures to control gold trading, he said.
Tran Thanh Hai, general director of the Vietnam Gold Business and Investment Joint Stock Company, said he proposed a specific roadmap on solutions to manage the gold market.
He said certain factors should be considered, including how to handle several hundred tonnes of gold held by the public, the status of legal ownership of gold bars, and the setting of gold prices.
To meet demand for gold investment among the public, authorities should conduct research with the aim of setting up an official gold-trading floor, which would collect fees and be strictly supervised.
The Government resolution guiding the foreign-exchange decree said that gold bars were gold that had been processed into bars in different shapes, bearing numbers representing quantity and quality and the producers' codes./.
