Draft law seeks SBV’s early intervention in bank runs
HCMC – An early intervention by the State Bank of Vietnam, or SBV, should be needed when a bank run occurs,
In 2023, in addition to the complex difficulties of the world economic situation, the mass withdrawal incident at SCB Bank at the end of 2022 will have a strong impact on liquidity and market psychology in 2023, according to the Governor of the State Bank of Vietnam Nguyen Thi Hong.
The Governor also emphasized that through past incidents, the State Bank has learned lessons to provide leadership and direction to credit institutions, improve the ability to detect risks and be proactive. Warn credit institutions and strengthen inspection and supervision.
The SCB incident has a strong impact on liquidity and market psychology in 2023.
The head of the State Bank of Vietnam, Nguyen Thi Hong, had important shares about the monetary sector and banking activities in 2023.
Specifically, speaking at the conference summarizing the work in 2023 and implementing tasks in 2024 of the Government and local authorities on January 5, 2024, Governor Nguyen Thi Hong said that 2023 continues to be a year full of difficulties and challenges for the Government's macroeconomic and monetary management.
"Because in addition to the complex difficulties of the world economic situation, the mass withdrawal incident at SCB Bank at the end of 2022 has a strong impact on liquidity and market psychology in 2023" - electronic information portal The State Bank of Vietnam quoted the Governor as saying.
However, with the attention and direction of the Party and the State, the drastic direction of the Government and the Prime Minister, the State Bank has been proactive, firm and flexible in operating, contributing to controlling average inflation at 3.25%, thereby ensuring the safety of credit institutions and a stable foreign exchange market.
According to the head of the State Bank, when inflation was controlled at a low level and inflation pressure was not forecast to be large, the State Bank proactively reduced operating interest rates four times and brought lending interest rates to a level down more than 2% compared to last year's end, especially since the interest rate level has returned to the level before the COVID-19 epidemic.
The State Bank has also restructured, kept the debt group intact, and deployed practical credit packages such as a housing credit package of 120,000 billion VND and a preferential credit package of 15,000 billion VND for forestry and aquatic products.
In particular, the State Bank has fully allocated the annual credit limit from mid-2023 and coordinated with many localities to organize hundreds of networking conferences between banks and businesses.
VND is highly stable, and foreign exchange reserves have improved.
State Bank leaders said that the Vietnamese Dong remains highly stable.
"Vietnam Dong depreciated by about 2.9%, showing that it is one of the currencies with high stability and the State's foreign exchange reserves have improved compared to the end of last year", - Ms. Hong emphasized. These are the points plus to raise Vietnam's credit rating in 2023.
Regarding credit growth, the Governor said that by the end of 2023, credit will increase by about 13.7%.
This is "negligibly" lower than the previous year's level of 14.18%. The Governor assessed that credit increased at the end of the year thanks to the results of resolving the difficulties mentioned previously.
The Governor emphasized that 2023 is also the year that the State Bank focuses heavily on fundamental solution groups for mid-term sustainability.
"Through past incidents, the State Bank has learned lessons to provide leadership and direction to credit institutions, improve the ability to detect risks, improve the ability to detect risks, proactively warn credit institutions, and strengthen inspection and supervision," - Governor Nguyen Thi Hong shared.
The Governor added that the State Bank is also implementing the Project "Restructuring the system of credit institutions associated with handling bad debts for 2021-2025".
In particular, according to the State Bank's leaders, the banking industry is one of the ministries and branches pioneering digital transformation to reduce costs and increase utilities for businesses and people. Currently, most banking services and operations are performed in a digital environment.
"The State Bank is working with the Ministry of Public Security to pilot small credits to limit "black credit", - Ms. Nguyen Thi Hong informed.
The State Bank will respond flexibly.
Regarding the mission direction 2024, Governor Hong expressed that the State Bank is also aware that the economy still faces many difficulties and challenges.
Therefore, the Governor affirmed that the State Bank is prepared to respond flexibly to the situation and will focus on handling potential risky issues for the banking system, such as handling weak banks and bad debts, which are on the rise.
"In particular, we focus on issues that people and businesses are concerned about and are being drastically directed by the Government, such as credit management. Right from the first days of the year, the State Bank has given direction that credit management is 15%. Currently, all notifications have been allocated to credit institutions based on the credit institutions' ratings with very clear and transparent criteria," - the Governor said.
Ms. Nguyen Thi Hong stated clearly that the State Bank would closely monitor the situation, and if inflation were controlled at a low level, appropriate adjustments would be made.
On the contrary, if inflation increases, the State Bank will use monetary tools to control it to achieve the set goal.
Request
Sharing at the conference, Governor Nguyen Thi Hong raised 2 recommendations.
Firstly, in the context of Vietnam's credit balance/GDP being at a high level, as some international organizations have warned, according to the Governor, it is necessary to focus on synchronously implementing solutions to remove difficulties for the real estate market and corporate bond market.
Governor Hong emphasized that it is necessary to resolve the issue of legal problems to create conditions for projects to operate again and limit bad debts arising, create conditions for the development of the corporate bond market, and reduce the risk of bad debt depending on bank capital, especially medium and long-term capital.
Second, the State Bank recognizes that Vietnam's small and medium-sized enterprises currently account for 95% but still face difficulties, so the Government's solutions need to focus on this group according to the solutions already in the Law, such as bank loan guarantees.
The Governor said that there needs to be guidance for businesses to meet regulations on sustainable green standards, which are very strict because if they meet these standards, Vietnam's export activities will be easy.
