Central bank to up inspection: PM
Updated : Wednesday, January 10, 2018 3:09 PM (GMT+0700)

PrimeMinister Nguyen Xuan Phuc has required the State Bank of Vietnam (SBV) toenhance inspection and supervision to ensure the safety of the banking systemand increase the confidence of people in the system in 2018.

Illustration photo - Source: VNA

At the January 9 meeting toreview last year’s performance and prepare for implementing tasks in 2018, thePM also instructed the banking industry to boost the restructuring of ailingcredit institutions.

Besides ensuring theconsumer price index of below 4 percent, the SBV must also further cut lendinginterest rate and boost consumer lending this year, Phuc said.

He also required the centralbank to create favourable conditions for local commercial banks to enhancefinancial status and operational efficiency, aimed at having a Vietnam bank,either State-owned or private, at the regional level soon.

The Prime Minister has sofar entrusted two deputy prime ministers of Vuong Dinh Hue and Trinh Dinh Dungas well as the SBV to scrutinise the forecast for the real-estate market after2019 to help the Government actively have suitable policies for the market.

The SBV also needs to soonhave regulations to manage the cryptocurrency as instructed by the Government,Phuc said.

At the meeting, Phuc alsoappreciated the achievements of the banking industry last year, whichcontributed significantly to the country’s 6.81 percent GDP growth.

He said that the centralbank bought another 1 billion USD for the past few days, raising the nation’stotal foreign reserves to new record high of 53 billion USD.

“High foreign reserves, lowinflation and suitable forex policy have helped enhance Vietnam’s prestige andthe confidence of investors, firms and the people”, he said.

At the meeting yesterday,SBV also announced its key monetary management policies for 2018 with a focuson macro-economic stability.

SBV Governor Le Minh Hungsaid that SBV aimed to pursue a proactive and flexible monetary policy to cutinterest rates to support local firms, besides stabilising foreign currency andgold markets.

The monetary policy in 2018would work in close conjunction with fiscal and other macro-economic policiesin a move to control inflation and support economic growth at a reasonablelevel, he said.

“Right after the meeting, thecentral bank will issue Resolution 01 on implementing tasks of the bankingsector in 2018, in which it will instruct credit institutions to consider arate cut for lending interest”, Hung said, adding the central bank will alsocut the lending rate in the OMO (open market operations) market to aid theinstitutions.

The central bank announced acredit growth target of 17 percent for 2018, lower than the 18.17 percent lastyear. It will, however, closely monitor the market to make suitable adjustmentsfrom time to time.

SBV stated that lending nextyear would continuously focus on the Government’s prioritised sectors, such asagriculture, exports, spare-parts industries, small- and medium-sizedenterprises and hi-tech firms, while limiting the capital to risky industriessuch as real estate, securities and consumer lending.

As lending in foreigncurrencies would continue in 2018 as per a recent circular, SBV said it wouldstrictly control such kind of lending to ensure the country’s de-dollarisationpolicy.

After raising Vietnam’sforeign reserves to more than 53 billion USD to date this year - a record highin recent years - SBV affirmed it would continuously try to increase thecountry’s foreign reserves this year besides supporting efforts to stabilise theforex market.

Measures will be also takento stabilise the monetary market and ensure liquidity of the banking system,the central bank has said, adding it will continue the restructuring of creditinstitutions and settle non-performing loans.

Assessing the monetarypolicy management in 2017, Governor Hung said owing to a good foreign currencysupply source and a flexible daily reference exchange rate policy, SBVcontinued the purchase of foreign currencies in 2017, helping the nation’sforeign reserves to hit a new record of more than 53 billion USD.

Hung quoted Bloomberg’sassessment which reported that the Vietnamese dong was one of the most stablecurrencies in Asia in 2017.

According to him, liquidityof the domestic foreign exchange market last year was good and met the legaldemands of local organisations and individuals.  

With the synchronous andflexible management of gold-trading activities in accordance with theGovernment’s Decree 24, the gold market last year continued to be relatively stable,with a decreasing demand for gold bars in the local market, said Hung.

"Last year, the localmarket did not see any gold fever and speculation as in previous years, whichcaused instability in the local foreign exchange market and the country’s macroeconomy.Gold holders converted a part of their gold into the đồng for the cause ofsocio-economic development", he said.

According to Hung, thesuccessful monetary management policy last year also contributed to maintainingbasic inflation at 1.41 percent, helping the banking system cut lendinginterest rate by 0.5-1 percentage points in 2017.


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