SBV to propose establishment of gold exchange at appropriate time

State Bank of Việt Nam’s Governor Nguyễn Thị Hồng speaks at the Assembly. — Photo sbv.gov.vn

HÀ NỘI - The State Bank of Việt Nam (SBV) will work with ministries and branches to carefully research the establishment of a gold exchange before proposing it to the Government at an appropriate time, SBV’s Governor Nguyễn Thị Hồng said on Monday.

During the question-and-answer session regarding the banking and finance sector of the 15th National Assembly (NA)’s 8th meeting on Monday, she was answering questions related to a proposal to set up the gold exchange.

In response to deputy Đỗ Huỳnh Khánh of Đồng Nai Province's question, Governor Hồng said the establishment of a gold exchange has positive aspects such as improving the tranparency of transactions and creating more favourable conditions for buying and selling needs of people and businesses, however, it requires investment in infrastructure.

Besides, Việt Nam is not a gold producing country so to have enough gold for trading between market participants, the country must import from the international market, she added.

"The establishment of a gold exchange requires the SBV to coordinate with ministries and branches to research and assess the impact very carefully. The SBV will advise and propose to the Government the establishment of a gold exchange at an appropriate time," Hồng said.

Lưu Văn Đức, a deputy of NA’s delegation of Đắk Lắk Province, said the Prime Minister on April 2024 assigned the SBV and relevant ministries and agencies to urgently and effectively take solutions to stabilise and manage the gold market. Đức therefore asked the Governor to eloborate on SBV’s works to date and its impacts on gold prices and the gold market in the present and the future.

Meanwhile, deputy Phạm Văn Hòa of NA’s delegation of Đồng Tháp Province said the SBV’s recent policy to sell gold bars to stabilise gold prices has received great support from the people. However, banks only sell gold in Hà Nội and HCM City, but not in other provinces and cities across the country. Notably, banks only sell gold bars, not buy them, which is unreasonable.

Responding to the deputies, Governor Hồng said the fluctuations in Việt Nam's gold market are also common developments in countries around the world. From 2014 to 2019, the Vietnamese gold market was relatively stable and people's demand for gold decreased. Since 2021, the world gold price has increased and accordingly, the domestic gold price has also increased. Despite the rise, the SBV did not intervene in the gold market from 2021 to June 2024.

However, since June 2024 when the world gold price has reached a peak and the gap between the world and domestic gold price has widened sharply, the Government and the SBV have directed and organised nine gold auctions to stabilise the gold market. Previously, the auction measure was also taken in 2013 and proved a quite effective solution.

The SBV has also sold SJC gold directly through four State-owned commercial banks, which has helped reduce the gap between domestic and international gold prices from about VNĐ15-18 million per tael to only about VNĐ3-4 million per tael.

Hồng said the four banks have only sold gold bars in Hà Hội and HCM City because they have to consider demand before opening sales locations. Accordingly, demand in Hà Nội and HCM City have increased significantly.

The Governor also explained the four banks have followed the requirements of the SBV to stabilise the gold market, so they have only sold gold and haven’t bought it. If buying gold, the banks must verify the quality and gold content, so would need to invest in equipment and human resources. Besides, the gold purchase currently also poses risks for the banks as the fluctuations of gold price remains high.

"Gold price fluctuates complicatedly, so investment in the asset is risky and can make loss,” the Governor warned.

Relating questions on credit growth room and solutions to limit credit risks in the real estate sector raised by deputy Hồ Thị Minh of NA’s delegation of Quảng Trị Province, Governor Hồng said in Việt Nam, capital relies heavily on the banking system, so there were periods when credit surged by more than 30 per cent, even more than 50 per cent, causing risks to the banking system. Therefore, the SBV has to apply the credit growth cap policy since 2011 to ensure the safety of the banking system.

Regarding real estate credit, Hồng said the SBV does not prohibit real estate lending. Banks do not only lend based on the debt repayment ability of real estate businesses, but also their ability to raise short-term or long-term capital. According to the SBV’s regulation, banks cannot lend more than 30 per cent of short-term capital for medium- and long-term loans.

Answering a question on a SBV’s policy to keep a zero per cent interest rate on US dollar-denominated deposits raised by deputy Phạm Văn Hòa of NA’s delegation of Đồng Tháp Province, Hồng said dollar-denominated depositors benefit from fluctuations in the USD/VNĐ exchange rate, so they cannot enjoy additional interest. The policy aims to avoid dollar hoarding, which can cause adverse impacts on the country’s macro-economic stability.