NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGRAMS

-------***-------

ASSIGNMENT: MACROECONOMICS

TOPIC: Lecture 7: Monetary System

Student: Phạm Ngọc Linh

Class: International Business Administration 62A
Student code: 11205861

Ha Noi, 2021
 TABLE OF CONTENT

INTRODUCTION ……………………………………………………………3
THEORY …………………………………………………………………….....4
I. The meaning of money ……………………………………………………….4
II. The Creation of Money & the Money Supply ……………………………….7
III. Market for Money …………………………………………………………11
IV. Monetary Policy …………………………………………………………...13
FACTS ………………………………………………………………………...15
CONCLUSION ………………………………………………………………..18
REFERENCES ………………………………………………………………..19

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 INTRODUCTION
Money is not at all an unusual word heard these days, especially economic
students. Money can be described as something that is used to pay for goods and
services, as well as to compensate people for their labor. Money has existed in various
forms throughout history, ranging from salt, stones, and beads to gold, silver, and
copper coins, and, more recently, virtual currency. Money must be universally accepted
by both buyers and sellers in order to be useful, regardless of its type.

Nonetheless, for me, I heard the word “money” many times from my parents
when I was a child. To the best of my recollection, my mother would always lament
that “What should we do without money”. At that moment, I clearly thought “Money is
just a piece of paper”, with the mind of a small child. I tend to be more curious about
“money” during growing up and keep wondering about: What is money? What effect
does it have on the economy? What is the process by which a country create money?
Are there any policies on money? And I am certain that as an economics student, I am
capable of answering these questions.

The following essay is based on my research and understandings of the monetary

system.

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 THEORY
I. The meaning of money:

1. Definition:
Every day, we use money to buy our favorite items, while stores use the money
to list prices for items. In addition, everyone, more or less, stores money to increase
their wealth. Even so, have we always asked ourselves the question of why we hold
papers that have no real value in our hands, but easily enter the store in exchange for
real-value goods? Moreover, in the modern economy, in addition to using cash, we also
use checks or credit cards in payments. Is a check or credit card money? For answers,
we need to understand what exactly money is.
Money is the set of assets in an economy that people regularly use to buy goods and
services from other people or to put in another way, money is a medium of exchange
You can buy a meal at a restaurant or a shirt at a store with the money in your wallet.
Without using money, it will take a lot of effort for people to solve simple problems
every day.

2. The Kinds of Money:

2.1. Commodity money:

When money takes the form of a commodity with intrinsic value, it is called
commodity money. The term intrinsic value means that the item would have value even
if it were not used as money.
One example of commodity money is “grain” stamp in Vietnam. No one in the world
ever charged stamps at grain prices. However, in Vietnam, stamps are calculated in
grain prices that were made between 1953 and 1954. It can be said that printing the
price with grain on Vietnam’s postage stamps is a very special form, rare or not in the
world is currently considered by many stamp collectors.
Commodity money is less susceptible to devaluation form inflation because it is
based on a physical resource. The government cannot create more of the physical
resource, which means they cannot create new money whenever they want to.
Commodity-based economies, on the other hand, grow more slowly than fiat-based
economies, which can't meet the demand for money because physical resources take
time to grow.

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 2.2. Fiat money:
Money without intrinsic value is called fiat money. A fiat is an order or decree,
and fiat money is established as money by government decree. For example, compare
to paper Vietnam dong in your wallet (printed by the State Bank of Vietnam) and the
paper Vietnam dong from a game. Why can you use the first to pay your bill at a
restaurant but not the second? The answer is that the State Bank of Vietnam has decreed
its Vietnam dong to be valid money.
In ia ifiat ieconomy, ithe igovernment ican iincrease ithe imoney isupply iby iprinting
inew ibills, iwhich ican istimulate ieconomic igrowth. iSince iphysical icommodities icannot

ibe iproduced iby ithe igovernment, icommodity-based ieconomies itend ito igrow islower.

iHowever, ithe igovernment ican ijust iprint imore imoney iwhenever ithey iwant, ifiat

icurrencies ican ibe imore iprone ito iinflation. iThis ipattern iis ialmost iuniversally iseen iin

ievery ieconomy ithat ihas iadopted ia ifiat icurrency. iThe igovernment iprints itoo imuch

imoney iwhich ileads ito iinflation ior ieven ihyperinflation isuch ias iin iVenezuela,

i Zimbabwe, ior ithe iWeimar iRepublic iin iGermany.

3. The Functions of Money:

In the economy, money serves three functions which is a medium of exchange, a
unit of account and a store of value. These three functions, when combined, separate
money from other economic commodities like stocks, bonds, real estate, and so on.
First, a medium of exchange is an item that buyers give to sellers when they want
to purchase goods and services. When you go to a supermarket to buy meat, you give a
cashier your money and the cashier gives you meat. The transaction can take place
because money is transferred from buyers to sellers. When you walk into a supermarket,
you certainly know that the supermarket will accept your money for the items it is
selling since money is the most widely accepted medium of exchange.
Second, a unit of account is the yardstick people use to post prices and record debts.
When you go shopping, you might observe that a dress costs 500.000VND and fried
chicken costs 100.000VND. Although it would be accurate to say that the price of a
dress is 5 fried chickens and the price of fried chicken is 1/5 of a dress, prices are never
expressed in this manner. Similarly, if you take out a loan from a bank, the size of your
future loan repayments will be calculated in VND rather than in a quantity of goods and
services. Money is used as the unit of account when measuring and recording economic
value.
Third, a store of value is an item that people can use to transfer purchasing power
from the present to the future. When a seller accepts money today in exchange for a

5
good or service, that seller can hold the money and become a buyer of another good or
service at another time. Money is not the only store of value in the economy. Money
loses some purchasing power each year in an inflationary environment. A person can
also transfer our chasing power from the present to the future by holding nonmonetary
assets such as stocks and bonds. The phrase wealth refers to the total of all stores of
value, including both money and nonmonetary assets.

4. How to measure the Money Stock:

The imost iobvious iasset ito iinclude iis icurrency i– ithe ipaper ibills iand icoins iin ithe
ihands iof ithe ipublic. iCurrency iis iclearly ithe imost iwidely iaccepted imedium iof iexchange

iin iour ieconomy. iHowever, icurrency iis inot ithe ionly iasset ithat iyou ican iuse ito ibuy igoods

iand iservices. iMany istores ialso iaccept ipersonal icheck, itherefore, iyou imight iwant ito

iinclude idemand ideposits i– ibalances iin ibank iaccounts ithat idepositors ican iaccess ion

idemand isimply iby iwriting ia icheck ior iswiping ia idebit icard iat ia istore i

To measure the money stock, money is divided into M0, M1, M2 based on the
liquidity - the ease with an asset can be converted into the economy’s medium of
exchange.
M0 or currency (C) includes the paper bills and coins in the hands of the public.
This measure is the highest liquidity.
M1 iincludes iM0, idemand ideposits, itraveler’s ichecks iand iother icheckable ideposits.
iIt iis ioften ireferred ito ias ithe inarrowest imeasure iof imoney isupply ior inarrow imoney.

iHowever, for the purpose of thoroughness and to avoid confusion, please note that some

countries also measure a similar, but even narrower money supply M0 (e.g., UK).
M2 iincludes iM1 iand isaving ideposits, ismall itime ideposits, imoney imarket imutual
ifunds iand ia ifew iminor icategories. iIt iis ioften ireferred ito ias ian iintermediate imeasure

ibecause iit iis ibroader ithan iM1 ibut inot iquite ias ibroad ias iM3. M2 is critical in any

discussion about money supply because it often provides more detailed information
than M1 alone.
In addition, in developed countries, there is also M3 including M2 and other
valuable papers such as stocks, bonds, and so on. M3 was stopped being reported by
the Federal Reserve in 2006 because it did not provide any important information on
economic activity that was not already reflected in M2.

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 II. The Creation of Money and the Money Supply:

1. The role of two-tier Banking System:

1.1. The Central Bank:

a) Definition:
A central bank is an institution designed to oversee the banking system and regulate
the quantity of money in the economy. For example, Bank of England, the State Bank
of Vietnam, and the Federal Reserve (Fed) – the central bank of the United States

b) The role of Central Bank:

First, central banks control and manipulate the national money supply by issuing
currency and setting interest rates on loans and bonds. iCentral ibanks ioften iraise iinterest
irates ito islow igrowth iand iprevent iinflation iand ilower ithem ito istimulate igrowth,
iindustrial iactivity, iand iconsumer ispending. iIn ithis iway, ithey imanage imonetary ipolicy

i to idirect ithe icountry's ieconomy iand iachieve ieconomic igoals. i

Second, they regulate member banks through capital requirements, reserve
requirement which determine how much money banks can lend to customers, and how
much cash they must maintain on hand, and deposit guarantees, among other
instrument. They ialso iprovide iloans iand iservices ifor ia ination’s ibanks iand iits
igovernment iand imanage iforeign iexchange ireserves.

Finally, a central bank is known that “lender of the last resort”" which means it is in
charge of delivering funds to nation’s economy when commercial banks are unable to
cover a supply shortage. In other words, the central bank prevents the country's banking
system from collapsing.

1.2. The Commercial Banks

a) Definition:
A commercial bank is a financial institution which accepts deposits from the
public and gives loans for the purposes of consumption and investment to make profit.
Other commercial banks in Vietnam such as Vietin Bank, Vietcom Bank, Military Bank
and so on.

b) The role of the Commercial Bank:

7
 Commercial banks are an important part in the creation of demand deposits, which
boosts the economy by increasing production, employment, and consumer spending.
Therefore, central banks regulate commercial banks. Central banks, for example,
impose reserve requirements on commercial banks. This imeans ithat ibanks imust
imaintain ia ispecific ipercentage iof itheir iconsumer ideposits iat ithe icentral ibank ias ia isafety

net iin ithe ievent ithat ithe igeneral ipublic iwithdraws ifunds iin ia irush.
i

Commercial banks play a vital role in the economy. Not only do they provide a
necessary service to consumers, but they also assist in the creation of capital and
liquidity in the market. This entails taking money that their customers deposit for their
savings and lending it out to others.

2. The Creation of Money:

Money creation is the concept of financial economics dealing with the processes
adopted to boost the supply of money in an economy. This process is extremely
important in an economy as it contributes to an increase in the economy’s liquidity.

Money Creation with Fractional-Reserve Banking

A fractional-reserve banking is a banking system in which banks hold only a

fraction of deposits as reserves. The fraction
of total deposits that a bank holds as reserves
is called reserve ratio (or the reserve
requirement). This ratio is influenced by
both government regulation and bank policy.
If the reserve requirement is one percent, for
example, a bank must retain reserves equal
to one percent of total customer deposits.
Physical currency in a bank vault and
reserves deposited with the central bank are
the most common forms of these assets.
Furthermore, banks may retain reserves over
the legal minimum, known as excess
reserves, to ensure that they do not run out of
cash.

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 To iunderstand ithe iprocess iof imoney icreation, ilet ime icreate ia ihypothetical
isystem iof ibanks. iAssume ithat iFirst iNational iBank ihas ia ireserve iratio iof i10%. iHere iis

ithe iT-account ifor iFirst iNational iBank:

First iNational iBank

Assets Liabilities
Reserves i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i$10.00 i i i i Deposits $100.00
iiiiiiiiiiiiiiiiiiiiiiiiiiii

Loans i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i90.00
First inational istill ihas i$100 iin iliabilities ibecause ithe iloans idid inot ichange ithe ibank's
iresponsibility ito iits idepositors. iHowever, inow ithe ibank ihas itwo itypes iof iassets: iit ihas

i$10 iof ireserves iin iits ivault, iand iit ihas iloans iof i$90. iIn itotal, iFirst iNational’s iasset istill

i equal iits iliabilities.

The icreation iof imoney idoes inot istop iwith iFirst iNational iBank. iSuppose ithe iborrower
iform iFirst iNational ispends ithe i$90 ion isomething ifrom isomeone iwho ithen ideposits ithe
icurrency iin iSecond iNational iBank. iHere iis ithe iT-account ifor iSecond iNational iBank:

Second iNational iBank

Assets Liabilities
Reserves i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i$9.00 i i i i Deposits $90.00
iiiiiiiiiiiiiiiiiiiiiiiiiiii

Loans i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i81.00
In ithis iway, iSecond iNational iBank igenerates ian iadditional i$81 iof imoney. iIf ithis i$81 iis
ieventually ideposited iin iThird iNational iBank, iwhich ialso ihas ia ireserve iratio iof i10%,

ithis ibank ikeeps i$8.10 iin ireserve iand imakes i$72.90 iin iloans. iHere iis ithe iT-account ifor

iThird iNational iBank:

Third iNational iBank

Assets Liabilities
Reserves i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i$8.10 i i i i Deposits $81.00
iiiiiiiiiiiiiiiiiiiiiiiiiiii

Loans i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i72.90
The iprocess icontinues iindefinitely. iEach itime ithat imoney iis ideposited iand ia ibank iloan
iis imade, imore imoney iis icreated. iIt iturns iout ithat ithough ithis iprocess iof icreating imoney

ican igo ion iforever, iit idoes inot iproduce ian iinfinite iamount iof imoney. iIf iyou ilaboriously

iadd ithe iinfinite isequence iof inumbers iin ithe iabove iexample, iyou iwill idiscover ithat ithe

9
$100 iof ireserves igenerates i$1000 iof imoney. iIf you laboriously add the infinite
i

sequence of numbers in the above example, you will discover that the $100 of reserves
generates $1000 of money. The amount of money the banking system generates with
each dollar of reserves is called money multiplier. The money multiplier is the
reciprocal of the reserve ratio. Moreover, if there is any change in bank reserves, it will
directly affect the money supply by a multiple of that amount.

The formula for money multiplier is given as follows:

!
mM = (where: mM is money multiplier, rr is reserve ratio)
""

Thus, the higher the reserve ratio, the less of each deposit banks loan out, and the smaller
the money multiplier.

3. The Money Supply:

The money supply is the quantity of money available in the economy. The money
supply is commonly defined to be a group of safe assets that households and businesses
can use to make payments or to hold as short-term investments.
The money supply is determined by the amount of M1 or M2 depending on the
monetary policy of a country, which usually includes the currencies with the highest
conversion ability:
MS = Cu + D
(where: Cu is the amount of cash outside the banking system, D is the value of deposits
in the bank)
The monetary base (strong amount) (B) is the amount of money issued by the Central
Bank in the form of cash circulation and cash reserves at the bank:
B = CU + R
(where: R is the amount of cash reserves of the Banking system (B is M0)).
Considering the relationship between MS and B
!" #
!" $%&' #$ &
= -> = # #
!" $
# $%&( % &
# #
replacing:
CU/D = cr is the ratio of cash to demand deposits in payments
R/D = rr is actual reserve rate of commercial banks

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 Then:
#$ '"&!
mM = =
% '"&""

III. Market for Money:

1. The Demand for Money:

In monetary economics, the demand for money (MD)is the desired holding of
financial assets in the form of money such as cash and bank deposits rather than
investments. The demand for money depends on demand for goods and services-
aggregate expenditures (AE), income (Y), prices of goods and services (P) and interest
rate (r).
There are three main motivations to hold money, as opposed to bonds, equity, or
other financial asset classes, are as follows:
The first motivation is the transaction which means that people need money on
a regular basis to pay bills and finance their discretionary consumption. In the classical
quantity theory of money . The demand for money is a function of prices and income
(assuming the velocity of circulation is stable.) If income rises, demand for money will
rise.
The second motivation is the precaution. Precautionary money balances are held
to moderate the impact of unexpected spending needs that can occur in the future such
as medical examination, medicine, or expenses.
The third motivation is the speculation. Money held for speculation is also
known as the portfolio demand for money. The money is held to take advantage of
speculative opportunities or for covering risks in other assets or the economy.

2. Money Market Equilibrium:

Money market equilibrium occurs at the interest
rate at which the quantity of money demanded is equal
to the quantity of money supplied. With a stock of
money (M), the equilibrium interest rate is r.
A ishift iin imoney idemand ior isupply iwill ilead ito ia
ichange iin ithe iequilibrium iinterest irate.

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 First, let’s see changes in the money demand.

A Decrease in the Demand for Money

A idecline iin ithe idemand ifor imoney idue ito ia ishift iin itransactions icosts, ipreferences, ior
iexpectations ias ishown iin iPanel i(a) ithat imake ipeople iwant ito ihole iless imoney iat ieach

iinterest irate. iThe imoney icurve iwill ishift ito ithe ileft iwhile ithe idemand ifor ibonds iwill

ishift ito ithe iright ias ishown iin iPanel i(b). iReduced interest rates will lead to a lower

exchange rate and depress net imports. Therefore, the aggregate demand curve will shift
to the right from AD1 to AD2 as shown in Panel (c). All other factors remain constant,
real GDP and the price level will fall.

Second, let’s see changes in the money supply

An increase in the Money Supply

A icentral ibank iincreases ithe imoney isupply iby ipurchasing ibonds, iincreasing ithe
b
idemand ifor ibonds iin iPanel i(a) ifrom iD1 to iD2 and ithe iprice iof ibonds ito iP 2 resulting iin
i i i

ian iincrease iin ithe imoney isupply ito iM’ iin iPanel i(b). iThe iinterest irate imust ifall ito ir2 to
i

ireach iequilibrium. iLower iinterest irate iwill istimulate iinvestment iand inet iexports, ivia

ichanges iin ithe iforeign iexchange imarket, iand icause ithe iaggerate idemand icurve ito ishift

12
ito ithe iright, ias ishown iin iPanel i(c), ifrom iAD1 to iAD2. iReal iGDP iand ithe iprice ilevel iboth
i

irise.

IV. Monetary Policy:

1. Tools of monetary controls:

Central banks use various tools to implement monetary policies. The following
are some of the most commonly used policy tools:
The first tool is the open–market operations. They can affect the money supply
by purchasing and selling government bonds and other securities. Central bank
securities trading changes the money base: buying increases the money base, and the
sale reduces the money base. On the other hand, transactions between financial
institutions, business firms, or individuals merely redistribut the amount of money
available in the economy without changing the total cash base.
The second tool is the reserve requirements. The regulation that set the
minimum amount of reserves that banks must hold against deposits. The central bank
can control the money supply in an economy by adjusting the required amount. An
increase in reserve requirements raises the reserve ratio, lowers the money multiplier,
and decreases the money supply. On the other hand, a decrease in reserve requirements
lowers the reserve ratio, raises the money multiplier, and increases the money supply.
The third tool is the discount rate. That’s how much a central bank charges
member to borrow funds from its discount window. When there are insufficient reserves
required, commercial banks must borrow money from central banks. This situation can
happen because the bank has loaned too much or because there are too many funds
withdrawn. When a central bank lends money to a bank, the banking system has more
reserves and they can generate more money.
In conclusion, the central bank can affect the money supply through three main
instruments: open-market operations, reserve requirement and discount rate. Of these
three tools, open-market operations is the most widely used. In developed countries,
this tool takes place regularly. It is the fastest and most efficient impact tool. While
reserve requirement is known as tool that central banks often use at times of crisis, when
commercial banks have been lending too much.

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 2. Problems in Controlling the Money Supply:
However, it should be noted that the central bank can never control the amount
of money supplied perfectly, because the central bank cannot directly control all factors
of the money factor.
The first problem of monetary policy is that a central bank has no control over
the amount of money that households choose to keep in banks as deposits. As
households and businesses keep less cash and deposit more money into banks, banks
will lend more and thus generate more money. To see clearly why this is a central bank
problem, let's assume that one day people lose faith in the functioning of the banking
system and so they decide to withdraw money from banks and keep more cash. When
this happens, the reserves of the banking system decrease and the amount of money
generated from them also decreases. Even without any central bank intervention, money
supply is still down.
The second problem of monetary policy is that a central bank has no control over
the amount that bankers choose to lend. When money is deposited in a bank, the supply
only increases once the bank lends a portion of it. Because banks can decide how much
money this banking system generates, it is impossible for the central bank to grasp how
much money this banking system generates. For example, assuming banks become
more cautious in business by unfavorable economic conditions, so they decide to lend
less and keep more reserves. With this decision by the banks, the supply of money will
decrease.
Therefore, in a system of fractional-reserves’ decision, the amount of money in
the economy depends in part on the behavior of depositors and bankers. The money
supply cannot be entirely controlled by a central bank since it cannot control or precisely
foresee this behavior.

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 FACTS

Monetary policy in Vietnam during COVID-19

I. Throughout the year of 2020:

The global picture in 2020 got off to a bleak start with the rapidly spreading outbreak
of the Covid-19 pandemic, which followed the most severe global recession since the
Great Recession of 1929-1933. In addition to human damage, due to social isolation
and blockade, the epidemic has crippled many global economic, trade and investment
activities; cross-border transactions fell sharply, the unemployment rate rose suddenly,
fracturing global supply chains. According to IMF, the global economy in 2020
narrowed to -3.5%, a recession more severe than the global financial crisis of 2008 -
2009 (down -0.1%), especially in developed countries.

Vietnam is not an exception from this phenomenon. Two Covid-19 outbreaks

have had a direct and far-reaching impact on many aspects of economic and social life;
production and business stagnation, many economic, cultural and social activities are
seriously affected, especially in the fields of transportation services, tourism,
restaurants, hotels, entertainment and so on; millions of workers are becoming
unemployment and workers' incomes are severely reduced.
By changing monetary policy in a reasonable way, our country has overcome
difficulties to, successfully implement the "dual goal": Both to prevent and control the
Covid-19 pandemic, to recover, develop the economy and ensure people's lives. As a

15
result, in 2020, the macro foundation is maintained stable, the average inflation is
controlled at 3.23%, the large balance of the economy is guaranteed. Economic growth
reached 2.91%, among the highest-performing countries in the region and the world
amid a severe global downturn. This trend continued in the first months of 2021,
according to which production continued to recover positively with the industrial
production index in the first 2 months of 2021 increasing by 7.4% over the same period
in 2020, in which the processing and manufacturing industry increased by 10.4%;
investment from the State budget reached 9% of the plan, which is the highest progress
in the last 5 years; FDI investment increased by 2%; exports and imports increased
sharply by 23.2% and 25.9% over the same period in 2020.
The above outstanding results have a significant contribution of the Banking
system. Monetary and credit solutions to support businesses and people in responding
to the above-mentioned shocks have been actively and timely implemented by the State
Bank, making important contributions in achieving the goal of controlling inflation,
strengthening the macro foundation, maintaining a healthy business environment,
supporting the momentum of economic growth recovery. Specifically:
Firstly, operating in sync, flexibly operating monetary policy tools to stabilize
the market, control inflation and support the economy to respond to the unfavorable
impact of the Covid-19 pandemic.
Secondly, continuously adjust the reduction of interest rates on a large scale, to
support the economy.
Thirdly, operating and announcing flexible central exchange rates daily, in line
with domestic and foreign markets, macroeconomic balance, currency and monetary
policy objectives; contributing to limiting the state of foreign currency trading and
absorbing shocks to the economy.
Positive results on macro stability, financial and monetary markets, creating a
favorable business environment, supporting the removal of difficulties for the economy
... showed that the solutions implemented by the Banking sector in the past time are in
the right direction, having practical effects on businesses and people. However, the
world market is still unusually volatile, especially the Covid-19 pandemic, natural
disasters, unpredictable epidemics continue to negatively affect the domestic economy
and banking system, economic growth is low (although singular in countries with
positive growth), inflation is still under unpredictable pressure from world prices, bad
debt pressures the banking system increases from the impact of the pandemic ... are
enormous challenges for the banking industry in the near future.

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 II. The predictions of 2021:

In 2021, the world economy is forecasted to recover faster than expected due to the
rapid progress of covid-19 vaccination and the adaptation to the epidemic of economies,
international organizations forecast that the world economy in 2021 will grow by 4.0 -
5.6%. International organizations forecast that Vietnam's economy in 2021 is among
the countries with high growth rates compared to the region and the world, from 6.1 -
8.6%. However, our forecast continues to face many difficulties and challenges.
Unpredictable developments of domestic and foreign epidemics, along with the re-
application of controls and blockades, can negatively affect the economic outlook in
2021.
In the context of opportunities, advantages, difficulties, intertwined challenges,
inheriting important and comprehensive achievements achieved in 2020 and previous
years, the management of monetary policy and banking activities in 2021 will closely
follow the developments at home and abroad. At the same time, the State Bank will
continue to be proactive, flexible, and make efforts to join hands with ministries and
sectors to support the resilient economy to overcome the pandemic, stabilize the
macroeconomics and inflation, creating a healthy business environment.

17
 CONCLUSION

The monetary system is always a challenging and complicated topic. In terms of

economic growth and inflation, it has a considerable impact on the entire country's
economy. Vietnam has made numerous outstanding successes, particularly during the
COVID-19 epidemic, paving the road for economic development thanks to the
government's flexibility and skill in implementing reasonable monetary policies.
Through this research, I have learnt more about monetary system. In the process of
doing this discussion, I cannot avoid making some mistakes. I hope my research meet
your expectations to some extents.

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 REFERENCES
1. Mankiw (2017), Principles of Economics (8th edition) (page 604-621)

2. http://eldata10.topica.edu.vn/v2.02017/ECO102/PDF_Slide/ECO102_Bai4
_v2.0017103201.pdf

3. https://corporatefinanceinstitute.com/

4. http://tapchinganhang.gov.vn/dieu-hanh-chinh-sach-tien-te-ho-tro-nen-
kinh-te-chong-do-voi-dai-dich-covid-19-va-dinh-huong-nam-202.htm

5. https://open.lib.umn.edu/principleseconomics/chapter/25-2-demand-
supply-and-equilibrium-in-the-money-
market/#:~:text=Money%20market%20equilibrium%20occurs%20at,GD
P%20and%20the%20price%20level.

6. https://courses.lumenlearning.com/boundless-economics/chapter/creating-
money/

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