Econ
Gold Raising: Impractical Policy for the Time Being
According to the State Bank of Vietnam, raising gold held by Vietnamese citizens aims at fostering the nations’ socio economic development.
However, how raise gold and manage the gold market to avoid gold fevers as it occurred repeatedly in the past still remains a heated debate.
Avoiding overheated gold market
The 2017 annual report on the Vietnamese economy released by the The Vietnam Institute for Economic and Policy Research (VEPR) made newspaper headlines as it gave an assessment on the Vietnam Gold Traders Association’s proposal to raise an approximately 500 tons of gold from the public.
According economic expert Nguyen Duc Thanh, the proposal is causing uncertaity in the market and it would reverse the government intervention and control measures against “goldenization” and “dollarization” of the economy.
Under the State Bank of Vietnam (SBV) assessment, the Vietnamese gold market has remained stable and self-regulated in 2016 and the first months of 2017. Gold has become less attractive and gold transactions have decreased considerably compared to previous years.
Over the past years, the SBV has succeeded in banning gold and foreign currency as means of exchange. According to VEPR analysis, raising gold would trigger gold hoarding and speculation. VEPR suggested the government to be consistent and resolute in gold market intervention and control to avoid repeating the past mistake.
Alternative investment channels
Gold raising policy was conducted 7 years ago when credit institutions were allowed to raise and lend gold. However, the policy was twisted, resulting in loss of funding and negative impacts on the economy and the trust of citizens. In order to fix the problems, the gold raising policy expanded with the opening of gold trading floors and gold trading accounts. The policy failed because of poor management leading to gold trading floor closure in 2010.
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Some suggest the government to raise gold through issuing gold certificate. However, economist Vu Dinh Anh said it’s more important to create alternative investment channels for the people to put their money in, instead of using gold as savings. According to an expert from the National Financial Supervision Commission, the monopoly of the SBV in gold transaction has a great effect on the stabilization of the gold market. Only when the gold market stabilized that the gold raising policy should be considered. “The optimal solution is being considered, but as difficult as the task is right now, it is too early talk about raising gold from the public,” the expert emphasizes.
the Prime Minister has instructed related agencies to work on policies and regulations for a stable macroeconomic environment and a reinforcement of value and trust in the Vietnamese dong and in this way luring gold and foreign exchange investment in production activities. . This is different from the previous definition of "mobilization," which indicates that the Government or the Bank lend gold or foreign currency from citizens.
“The policy of gold raising initiative is correct, as the citizens possess a large amount of gold. It would make no sense If we fail to mobilize this resource to serve the economic development. However, how we do it is a different story”. EconomistNguyen Tri Hieu
“Gold mobilization has been carried out in various ways, however, none are efficient up until now. Some even caused severe consequences. The poor results are due to citizens' low confidence in the market, as except for keeping gold, they cannot invest in any other channels. Therefore, the gold raising now is unrealistic”, said Economist Luu Bich Ho.
Avoiding overheated gold market
The 2017 annual report on the Vietnamese economy released by the The Vietnam Institute for Economic and Policy Research (VEPR) made newspaper headlines as it gave an assessment on the Vietnam Gold Traders Association’s proposal to raise an approximately 500 tons of gold from the public.
According economic expert Nguyen Duc Thanh, the proposal is causing uncertaity in the market and it would reverse the government intervention and control measures against “goldenization” and “dollarization” of the economy.
Transactions at Bao Tin Minh Chau Jewelry Co., Ltd
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Over the past years, the SBV has succeeded in banning gold and foreign currency as means of exchange. According to VEPR analysis, raising gold would trigger gold hoarding and speculation. VEPR suggested the government to be consistent and resolute in gold market intervention and control to avoid repeating the past mistake.
Alternative investment channels
Gold raising policy was conducted 7 years ago when credit institutions were allowed to raise and lend gold. However, the policy was twisted, resulting in loss of funding and negative impacts on the economy and the trust of citizens. In order to fix the problems, the gold raising policy expanded with the opening of gold trading floors and gold trading accounts. The policy failed because of poor management leading to gold trading floor closure in 2010.
Customer is looking for jewerly
Some suggest the government to raise gold through issuing gold certificate. However, economist Vu Dinh Anh said it’s more important to create alternative investment channels for the people to put their money in, instead of using gold as savings. According to an expert from the National Financial Supervision Commission, the monopoly of the SBV in gold transaction has a great effect on the stabilization of the gold market. Only when the gold market stabilized that the gold raising policy should be considered. “The optimal solution is being considered, but as difficult as the task is right now, it is too early talk about raising gold from the public,” the expert emphasizes.
the Prime Minister has instructed related agencies to work on policies and regulations for a stable macroeconomic environment and a reinforcement of value and trust in the Vietnamese dong and in this way luring gold and foreign exchange investment in production activities. . This is different from the previous definition of "mobilization," which indicates that the Government or the Bank lend gold or foreign currency from citizens.
“The policy of gold raising initiative is correct, as the citizens possess a large amount of gold. It would make no sense If we fail to mobilize this resource to serve the economic development. However, how we do it is a different story”. EconomistNguyen Tri Hieu
“Gold mobilization has been carried out in various ways, however, none are efficient up until now. Some even caused severe consequences. The poor results are due to citizens' low confidence in the market, as except for keeping gold, they cannot invest in any other channels. Therefore, the gold raising now is unrealistic”, said Economist Luu Bich Ho.
