SBV rolls out gold market measures
The State Bank of Vietnam (SBV) has developed several measures to closely monitor and control the domestic gold-bullion market.
Beginning after the Tet (Lunar New Year) holiday, credit institutions licensed to trade gold bullion will be required to determine whether their branches and transaction office have had difficulties in trading gold bars.
The credit institutions are then obligated to inform the central bank about these problems in writing so that the bank can solve the issues promptly.
In addition, the SBV will allow licensed institutions and enterprises to recast non-SJC bullion, converting them into SJC gold bars. They will also be allowed to temporarily export non-SJC bullion and import raw gold materials to produce SJC gold bars.
Earlier last year, the central bank decided that it would be the only producer of gold bullion, and chose SJC as the national brand.
The SBV has also encouraged commercial banks to negotiate with gold depositors to buy their gold bullion that is nearly due so that it can reduce that amount of physical gold that the banks would have to pay back.
The central bank will also continue granting gold-trading licenses to qualified banks and enterprises, and will closely watch the domestic gold market to quickly identify problems.
In an attempt to stabilize the gold market, the SBV is drafting a circular that would allow it to interfere in the market if necessary.
Pham Van Tam, vice chairman of the HCM City Gold and Silver Jewelry Association, said that instability of the gold market is due to a lack of proper means to supervise supply and demand as well as to control daily price fluctuations.
“The draft circular on the stabilization of the gold market is expected to settle these shortcomings and help control the market effectively,” Tam said.
Hoang Huy Ha of the Bank for Investment and Development of Vietnam said that it is necessary for the central bank to have a master plan for market interference.
Ha also suggested the establishment of a national gold exchange at which physical gold transactions and gold transactions via accounts would be carried out alternately, thus improving the market’s flexibility and effectiveness.
If information on gold supply and demand and prices becomes transparent and public, it will help limit illegal transactions, believed to be the main cause of economic instability, according to Ha.
Senior expert Vu Dinh Anh said the setting up of a national gold exchange should occur with the restoration of gold trading via accounts.
According to Dr Nguyen Dai Lai, an expert at SBV, a national gold exchange to be managed by the central bank will help fight against a monopoly, standardize gold quality, drive down differences in gold prices, and stop gold smuggling, while at the same time raise tax contributions.