Vietnam’s foreign exchange reserves have now increased to over $109.9 billion, so in order to renovate management, the State Bank of Vietnam (SBV) plans to establish the State Foreign Exchange Reserve Management Department, based on reorganizing and adjusting the functions and tasks of its Foreign Exchange Management Department and Central Banking Department.
The State Bank of Vietnam (SBV) will continue to restructure the network of credit institutions and keep credit conditions tight, strictly controlling loans for risky endeavors such as real estate, securities, build-operate-transfer (BOT) projects, and corporate bonds. It will also focus on promoting digital transformation and non-cash payments and perfecting documents on banking activities.
The State Bank of Vietnam has issued Circular No. 11/2021/TT-NHNN on the classification of assets and provision for risks, the use of provisions to deal with risks in the operations of credit institutions, and spending by foreign bank branches. Under the Circular, after five years, debts that have been settled by all measures but cannot be recovered will be removed from the off-balance sheet (OBS).
The State Bank of Vietnam (SBV) issued Circular No. 10/2021/TT-NHNN on July 21 on refinancing the Vietnam Bank for Social Policies (VPSB) so it may support employees and employers affected by the pandemic. Total refinancing is VND7.5 trillion ($325.94 million), and the refinancing interest rate and overdue refinancing interest rate are both 0 per cent per annum.
The State Bank of Vietnam and credit institutions have actively promoted solutions to help enterprises overcome the impact of Covid-19 since it first broke out in the country. The accumulated amount of interest exemptions and reductions for enterprises from January 23, 2020 to June 14, 2021 is VND18.27 trillion ($793.6 million). Such exemptions and reductions are expected to continue to rise.
Since Covid-19 first broke out, central banks around the world have loosened monetary policies to support economic recovery. Changes are now being made, however, to deal with rising prices and inflation. In Vietnam, meanwhile, the CPI is still low and it will be difficult to reach GDP growth targets, so it is likely that the State Bank of Vietnam will maintain its loosened monetary policy as it is effective in supporting economic recovery and has not caused any significant concerns about inflation.
The Vietnamese Government has assigned the State Bank of Vietnam to lead research into and implement the use of digital currency based on blockchain technology in the 2021-2023 period. This is viewed as a major step forward in the country staying abreast of global trends in Central Bank Digital Currency (CBDC).
