Governor admits responsibility for gold market instability

Addressing the current session of the National Assembly on October 31, Governor Nguyen Van Binh warned that the national economy has been manipulated by the gold market, with up to 300-400 tonnes of the precious metal being held by private individuals and organisations.

“This means approximately US$15-20 billion is being held in savings that could be redirected into business and production investment,” said the governor.

In addition, he said, gold market fluctuations over the years have affected exchange rates and import-export activities, indirectly fuelled inflation and also created macro-economic instability.

He vowed to solve the problem by taking bold measures to convert gold and foreign currency holdings into a large source of capital of Vietnam Dong to support the economy.

Binh quoted statistics as saying the national banking system has bought in and exchanged 60 tonnes of gold and around US$10 billion into Vietnam Dong so far this year to fuel the economy.

As a result, the liquidity of the banking system has improved, interest rates have been gradually trimmed, and the economy has grown considerably, though the rate is lower than expected, said the governor.

He also admitted responsibility for causing public misunderstanding about the monopoly on JSC gold bars, which has led to gold buyers converting other gold bars into SJC.

“The fact is that SJC makes up 93-95 percent of the gold bar market, that’s why we have decided to choose this brand name for Vietnamese gold,” Binh explained.  

However, he assured the legislature that all gold bars bearing registered brand names have been allowed in circulation since May 25, 2012, and the conversion to SJC gold is not compulsory.

He also confirmed that there is no difference between gold of this brand name and another.

He went on to say that the central bank will enhance the dissemination of information to increase public confidence in gold transactions.