The State Bank of Vietnam (SBV) is working with other ministries and agencies to draft a project on encouraging gold holders to convert the asset into money to invest in business and production.
Under a report recently sent to the National Assembly’s deputies, SBV said that the conversion, which is a long-term process, needs consistent, synchronous and step-by-step solutions.
According to the SBV, turning idle gold into other assets will change the habit and demand of people regarding gold ownership, making gold less attractive and preventing the development of using gold as a means of payment in the economy.
It is important for people to voluntarily sell gold and switch to other assets so that they can avoid shocks, thus the country may be able to prevent a gold fever among its people, SBV noted.
Therefore, it said, besides solutions to manage the gold market, measures to stabilize macro economy, enhance the value of VND and improve the business and investment environment is the premise to limit the use of gold in the economy and gradually encourage gold holders to convert it into money for production and business.
According to SBV, commercial banks in 2001-2008 were eligible to raise capital and make loans in gold. The policy helped financial institutions raise a large amount of capital for the socio-economic development with a stable gold price level. However, as the world’s economy turned negative and unpredictable in 2008-11, gold prices suffered from massive volatility, increasing as much as 300 per cent from 2008’s average price level. As a result, gold traded in Vietnam also moved with high volatility, causing losses for both commercial banks and borrowers.
Therefore, the government decided to prohibit the mobilization of gold in 2011, which has contributed to restricting the use of gold as a popular means of payment in the economy and avoiding chaos in the market.
However, with the application of the policy, it is estimated that there are currently some 500 tons held by the local people, which would be very useful if converted into VND to invest in the economy.
Last year, Prime Minister Nguyen Xuan Phuc also required SBV to study measures to mobilize idle gold from locals to invest in business and production. At that time, some experts proposed that it was time to get rid of the policy while the USD/VND exchange rate was relatively stable and inflation was low.
To mobilize gold, banking and finance expert Can Van Luc proposed to issue gold free interest rate deposit certificates, which the holders could mortgage at banks for loans.
According to Luc, the measure was more flexible and would not increase goldenisation in the economy. He said other countries such as India had been successful in applying this measure; however, he noted that the application must be scrutinized and if it adopted, a suitable time must be chosen.
Experts affirmed that successful gold mobilization to reinvest in business and production would be beneficial, but it should have an appropriate policy as gold is quite different from money.
Gold mobilization is complicated and risky as its price depends on the global and domestic market, they said, adding careful scrutiny is required to make the mobilization effective.
Experts also agreed that the most important thing was to keep the macro economy stable and create a favorable business environment, explaining that gold and dollar holders would automatically convert it into Dong when they found profitable opportunities in a stable macro economy.
There are currently some 500 tons of gold held by the local people
|
It is important for people to voluntarily sell gold and switch to other assets so that they can avoid shocks, thus the country may be able to prevent a gold fever among its people, SBV noted.
Therefore, it said, besides solutions to manage the gold market, measures to stabilize macro economy, enhance the value of VND and improve the business and investment environment is the premise to limit the use of gold in the economy and gradually encourage gold holders to convert it into money for production and business.
According to SBV, commercial banks in 2001-2008 were eligible to raise capital and make loans in gold. The policy helped financial institutions raise a large amount of capital for the socio-economic development with a stable gold price level. However, as the world’s economy turned negative and unpredictable in 2008-11, gold prices suffered from massive volatility, increasing as much as 300 per cent from 2008’s average price level. As a result, gold traded in Vietnam also moved with high volatility, causing losses for both commercial banks and borrowers.
Therefore, the government decided to prohibit the mobilization of gold in 2011, which has contributed to restricting the use of gold as a popular means of payment in the economy and avoiding chaos in the market.
However, with the application of the policy, it is estimated that there are currently some 500 tons held by the local people, which would be very useful if converted into VND to invest in the economy.
Last year, Prime Minister Nguyen Xuan Phuc also required SBV to study measures to mobilize idle gold from locals to invest in business and production. At that time, some experts proposed that it was time to get rid of the policy while the USD/VND exchange rate was relatively stable and inflation was low.
To mobilize gold, banking and finance expert Can Van Luc proposed to issue gold free interest rate deposit certificates, which the holders could mortgage at banks for loans.
According to Luc, the measure was more flexible and would not increase goldenisation in the economy. He said other countries such as India had been successful in applying this measure; however, he noted that the application must be scrutinized and if it adopted, a suitable time must be chosen.
Experts affirmed that successful gold mobilization to reinvest in business and production would be beneficial, but it should have an appropriate policy as gold is quite different from money.
Gold mobilization is complicated and risky as its price depends on the global and domestic market, they said, adding careful scrutiny is required to make the mobilization effective.
Experts also agreed that the most important thing was to keep the macro economy stable and create a favorable business environment, explaining that gold and dollar holders would automatically convert it into Dong when they found profitable opportunities in a stable macro economy.
Other News
- Q2/2024: Hanoi businesses expect better performance
- Companies, universities team up to develop semiconductor workforce in Vietnam
- Upcoming Law on industrial park – Vietnam’s passage to attract new foreign investment wave
- Samsung and NIC partner to develop Vietnam's tech talent pool
- Global tech firms interested in Vietnam’s semiconductor industry: Planning minister
- PM urges Central bank to ensure positive growth in 2024
- Nhon – Hanoi station metro line: An example of Vietnam-EU cooperation
- Vietnamese Gov't to continue VAT cut for second half of 2024
- Four- and five-star hotels to boom in Hanoi as tourism rebounds
- Vietnam’s manufacturing sector returns to growth in April
Trending
-
Vietnam - Fertile ground for innovation
-
Vietnam news in brief - May 6
-
Vietnamese Government steps up efforts to develop market for carbon credits
-
Vietnam seeks more information on Cambodia’s Funan Techo canal project
-
Hanoi: The 'epic victory' of Dien Bien Phu as seen in photos
-
Hanoi strives to ensure smooth high school exams
-
Carnaval Ha Long 2024 woos tourists with fireworks and drone light shows
-
Trivial jobs: Hanoians strive to keep their old trades alive
-
Affordable, quality tours offered at Hanoi Tourism Festival 2024