SBV operates monetary policy towards international standards

Synchronous solutions to ease difficulties for businesses, people

According to the SBV, in order to implement the policy of the National Assembly and the directions of the Government and the Prime Minister on reducing lending interest rates to resolve difficulties for businesses and the people, the SBV cut down the key interest rates four times, with a reduction of 0.5 to 2.0 percent per year.

On that basis, credit institutions will reduce lending interest rates to support customers to restore production and business operation, increase capital access of businesses and people, and promote economic growth.

Pham Chi Quang, Director General of the SBV’s Monetary Policy Department, said that in addition to operating monetary policy tools to serve the economic recovery and development process, the SBV also issued Circular No.02/2023/TT-NHNN stipulating the restructuring of repayment terms and keeping the debt group of credit institutions and foreign bank branches unchanged. Accordingly, the SBV’s management of monetary policy has contributed to facilitating bank capital access, controlling inflation, maintaining abundant liquidity, and stabilizing foreign exchange and monetary markets.

In terms of credit growth management in 2023, given the lower economic growth in the first half than the proposed scenario, on July 10, 2023, the SBV adjusted the credit growth target in 2023 for credit institutions with a system-wide allocation of about 14 percent in order to provide more credit to meet the needs of the economy.

Modernizing operation of monetary policy

According to the Director General of the SBV’s Monetary Policy Department, in this integration process of the country, there are many opportunities and also challenges for the SBV’s management of monetary policy. Therefore, modernizing the operation of monetary policy closer to international standards and practices has always been identified by the SBV as a key and prioritized task.

Accordingly, the modernization of monetary policy management must take into account specific factors of the economy such as more openness and high risks for the banking system as capital needs mainly depend on bank credit, and high expectations on the market needs to be strengthened.

A representative from the SBV said that, in the context that the economy is still facing difficulties in terms of capital sources, the SBV’s adjustment of credit growth targets will create favorable conditions for credit institutions to provide more capital in the short term for the economy, thereby contributing to easing difficulties for the recovery of production and business activities in the immediate future.

The SBV will also continue to direct credit institutions to focus on promoting safe and effective credit growth; orient credit to production and business operation, prioritized areas and growth drivers according to the Government’s policy; simplifying and shortening lending procedures, and creating favorable conditions in accessing bank credit.

“In the coming time, the SBV will keep closely following developments of the domestic and international markets, ready to support liquidity, monitor and review the credit growth of the whole banking system in the last months of the year to produce appropriate management solutions,” Pham Chi Quang emphasized.