1.

Government ‘s bank

The central bank operates as the government’s banker, not only because it is more
convenient and economical to the government, but also because of the intimate
connection between public finance monetary affairs

It floats public loans and manages the public debts on behalf of the government. It
keeps the banking accounts and balances of the government after making
disbursements and remittances. As an adviser to the government it advises the
government on all monetary and economic matters. The central bank also acts as an
agent to the government where general exchange control is in force.

2. Lender of Last Resort to Commercial banks. If banks get into liquidity

shortages then the Central Bank is able to lend the commercial bank sufficient funds
to avoid the bank running short. This is a very important function as it helps maintain
confidence in the banking system. If a bank ran out of money, people would lose
confidence and want to withdraw their money from the bank. Having a lender of last
resort means that we don’t expect a liquidity crisis with our banks, therefore people
have high confidence in keeping our savings in banks .

3 . Issue of Currency

The central bank is given the sole monopoly of issuing currency in order to secure
control over volume of currency and credit. These notes circulate throughout the
country as legal tender money , as well as destroy them which are not in circulation. It
has to keep a reserve in the form of gold and foreign securities as per statutory rules
against the notes issued by it.

In Viet Nam , In particular, the polymer money has par value of VND 500,000, VND
200,000, VND 100,000, VND 50,000, VND 20,000, VND 10,000 and banknotes with
par value of VND 5,000, VND 2,000, VND 1,000 and VND 500. guarantee for split of
par value in payment.

4 Monetary Policy
With the main objectives such as price stability, exchange rate stability, interest rate
stability, financial market stability, economic growth, reducing unemployment rate.
Central banks generally use three main tools of monetary control: (1) open-market
operations.(2) the interest rate and (3) reserve requirements for commercial banks.
Open-market operations describe the process of buying and selling government bonds
 in the open market. Meanwhile, the interest rate and reserve requirements define the
conditions at which commercial banks are able to borrow money from the central
banks.

3. Monetary policy of the State Bank of Vietnam in 2017

Accordingly, SBV said that it would pursue a proactive and flexible monetary policy next
year to stabilize the rates of interest and foreign exchange. The monetary policy will also
be in close conjunction with fiscal and other macro-economic policies in a move to
control inflation and support economic growth at a reasonable level. After buying more
than US$40 billion of foreign reserves to date this year - a record high in recent years, the
SBV affirmed that it would continuously try to increase the country’s foreign reserves
besides supporting efforts to stabilize the forex market in 2017. Measures will be also
taken to stabilize the money market and ensure the liquidity of the banking system,
according to the central bank. As for interest rate, the central bank targets a stable rate as
in 2016. They take measures to control credit growth target for 2017 to ensure the lending
is safe and effective. Lending in foreign currencies will continue in 2017, as per a recently
issued circular, SBV said that it would strictly control such kind of lending to ensure the
country’s de-dollarisation policy. The central bank had been regulating the exchange rate
with a more flexible and market-based methodology this year, setting the reference rate
every day and letting commercial banks trade the dollar at +/-3 percent on either side of
the rate.

It affirmed that no sudden rise in the demand and supply for the dollar had been reported
in the local forex market over the period. Liquidity in the banking system remains strong,
helping banks meet dollar demand of institutions and individuals in a timely manner.

4. The results of SBV’s monetary policy in 2017

On the basis of macroeconomic and monetary movements, from the beginning of 2017,
the State Bank of Vietnam (SBV) continued to manage the monetary policy in a proactive
and flexible manner in combination with fiscal and other macroeconomic policies in order
to achieve many positive results:

 Results of monetary policy management: the SBV managed synchronously and

proactively monetary policy instruments in order to control money supply targets
in accordance with the management objectives. By September 20, 2017, the total
liquidity (M2) increased by 9.59% as compared to the end of 2016 (rose by YoY of
15.36%), thereby supporting to curb inflation at low level, ensuring to control CPI
in the context that prices of several state-managed goodswere adjusted. Liquidity
of credit institutions was ensured, surplus was at the reasonable level to support
 credit growth at the beginning of the year, thereby contributing to stabilizing the
mobilizing interest rates, lowering lending interest rates, concurrently supporting
Ministry of Finance to issue Government bonds with long-terms and low interest
rates.

 Interest rate movements: The interest rates were commonly kept stable and
decreased despite of the increasing pressure in the six first months of 2017; from
July 10, 2017, in order to decrease the operational expenses of enterprises,
contributing to enhancing economic growth under Government’s orientation, on
the basis of prudently assess that the inflation movements has the slight increasing
trend and capacity of controlling the target of 4% set by the NA, and the banking
operation has achieved positive performance, the SBV reduced by 0.5% p.a for
maximum short-term loans applied for priority fields, depreciated by 0.25% p.a on
all the managed interest rates of the SBV, issuing documents to direct credit
institutions to continue proactively implementing measures to save costs,
improving operational efficiency to facilitate the reduction of lending interest rates
for priority fields.

As a result of the synchronous implementation of the above solutions, credit

institutions have actively carried out Government’s and the SBV policies reduced
the short-term lending interest rate by 0.5% p.a for priority fields. In addition,
credit institutions also positively decreased the interest rates for business and
production by around 0.5-1% p.a, depreciated the mid-term and long-term lending
interest rates for priority fields to 8% p.a (from 9-10.5% p.a previously),
implemented diversified packages of short, mid and long terms with preferential
interest rates for necessary sectors in economic development and social security;
The lending rate for short-term loans was 4-5% p.a, applicable to those customers
who have good loan-repayment track records, as well as transparent finances.

Concurrently, credit institutions continued saving expenses to reduce lending

interest rates, supporting enterprises under the direction of the Prime Minister and
the SBV. Currently, the average of lending interest rates for priority fields were 6-
6.5% p.a for short-term loans, 8-10.5%p.a for mid and long term loans; The rates
for production and business were commonly 6.8% - 9.0% p.a for short-terms, and
9.3% – 11.0% p.a for medium- and long-term ordinary loans.
 The graph illustrates the Interest Rate in Viet Nam during the 2010-2018 period

 Exchange rate results: The central rate continued to be managed in a flexible

manner in accordance with market movements and monetary policy targets;
proactively collaborating with proper liquidity adjustment of VND, closely
monitoring movement of market liquidity and forex status of the system to adjust
the appropriate central rate at the right time, thereby contributing to stabilize the
foreign exchange market and rate in line with the set targets. Foreign currency
liquidity is improved, the legal demand of individuals and organizations were met
promptly and adequately. The SBV bought foreign currencies from credit
institutions to raise the state international reserves; the exchange rates were
relatively stable in comparison with the end of 2016.

 On credit: Based on the orientation of credit growth for the whole year, SBV has
announced the targets for credit institutions and considered adjustments in line
with the performance of credit institutions; directed CIs to focus on credit
disbursements in production fields, prioritized industries, and tight control of credit
for potentially high risk areas. SBV also instructed credit institutions to concentrate
resources, balance capital sources to strongly implement preferential credit
programs for some priority sectors, especially in rural areas, high-tech agriculture...

Credit to the economy has been increasing since the beginning of 2017 and steadily
moving up over the months. As of September 20th, 2017, credit increased by
11.02% as compared to the end of 2016 - a high growth as compared to recent
years (such as 10.46% increased for the same period in 2016 and 10.78% for the
same period in 2015). The credit structure focused mainly on production and
business areas, in which credit for some key economic sectors and prioritized
sectors was growing higher than the overall growth rate of the whole system.

Lending to all priority sectors increased as compared to the end of 2016.

Specifically, as of August 2017, credit for agriculture and rural development
 reached VND 1,222,267 billion, up by 17% as compared to the end of 2016,
accounting for about 20.2% of total outstanding loans of the economy; Credit for
the four remaining prioritized sectors (by the end of August 2017): Credit for
export reached VND 207,001 billion, up by 8.14%; Credit for high tech enterprises
reached VND 35,012 billion, up by 25.12%; Credit for Industrial development
were VND 153,837 billion, increased by 18.9%; Credit for small and medium
enterprises reached VND 1,292,182 billion, up by 7.49%;

 Restructuring in the first nine months of 2017 continued to be strengthened and

implemented thoroughly and comprehensively by SBV, which focuses on 02
contents including: (1) to formulate and implement the National Assembly
Resolution on piloting Non-Performing Loan and the Scheme on "Restructuring
the system of CIs associated with NPL Resolution for 2016-2020 period"; (2) to
restructure weak CIs.

Since the issuance of Resolution No.42/2017/QH14, the Vietnam Asset

Management Company (VAMC) has resolutely carried out many measures to
implement the contents of NPL Resolution. Debt purchase by special bonds: From
January 1st, 2017 to September 15th, 2017, VAMC has purchased debts of 14
credit institutions with the total outstanding loans in the balance sheet of VND
20,995 billion, the purchasing price of debt was VND 20,619 billion, has met the
target of 2017 assigned by the State Bank of Vietnam. Thus, from 2013 to
September 15th, 2017, VAMC purchased 26,108 debts from 16,197 customers at
42 credit institutions, with the total outstanding balance of VND 296,550 billion,
the purchasing price of debt was VND 266,543 billion.

 In payment activities: The share of cash on total liquidity in the economy tended

to decrease, from 19.02% in 2005 to 14.02% in 2010 and to 11.49% as of
December 31st, 2016; The perceptions and habits of using cash in payment have
changed positively in the direction that more and more people choose non-cash
payment instead of cash payment.

Vietnam's current payment infrastructure has basically met and promoted non-cash
payment and payment via card.

Bank cards continue to grow; the number of cards issued, as well as the number
and value of card transactions continue to grow steadily. As of June 2017, the
number of issued cards reached 121.5 million cards. Commercial banks have
integrated many features of payment application of bank cards using payment of
electricity, water, telecommunications fees, insurance, transportation fees, and
online payment. Commercial banks are always interested in improving the quality
of card services, focusing on increasing the security aspects of bank cards.

At the moment, there are over 76 payment service providers implementing Internet
payment services and 39 providers providing payment services via mobile phones.
The State Bank of Vietnam (SBV) has directed the growth of card payment via
POS to increase the value and the volume of POS transactions, contributing to the
promotion of retail trade.

Nguồn: http://bit.ly/sbvreport

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