Renovating and improving the efficiency of monetary policy management and banking operations

Nhan Dan Newspaper introduces an excerpt from a speech delivered by Nguyen Thi Hong, member of the 13th Party Central Committee and Governor of the State Bank of Vietnam (SBV), at the ongoing 13th National Party Congress.

Governor of the State Bank of Vietnam Nguyen Thi Hong.
Governor of the State Bank of Vietnam Nguyen Thi Hong.

Looking back on the 2016-2020 period, monetary policy management and banking operations attained many outstanding achievements as follows.

Firstly, the SBV effectively managed monetary policies thanks to consistency, proactivity, prudence and flexibility, thereby contributing to controlling inflation below 4% in accordance with the target set by the National Assembly, maintaining macroeconomic stability, supporting economic growth, and stabilising the monetary and foreign exchange markets.

Secondly, credit management was implemented with the motto of expansion in parallel with safety and efficiency, and in line with the policy of gradually reducing the proportion of investment capital from bank credit, supporting the innovation of economic growth models, and enhancing the quality of economic growth. The SBV’s credit solutions and policies are on the right track, not only ensuring safety and sufficient capital for the economy, but also matching with the goal of controlling inflation. Credit structure shifted positively, focusing mainly on the areas of production, business and priority sectors.

Thirdly, payment activities made great strides in both quality and quality with many new, convenient and modern payment products and services based on the application of information technology. Payment technology recorded breakthrough developments, with non-cash payments having been accelerated while digital transformation activities and digital banking products and services developed strongly.

Fourthly, the restructuring of credit institutions associated with bad debt handling was implemented seriously and effectively, thus ensuring the safety of the banking system. Meanwhile, inspection and supervision were strengthened to prevent money laundering and improve transparency in the economy.

Fifthly, administrative reform in the period was implemented drastically, with positive results achieved in all aspects. The SBV ranked first among central ministries and sectors for five consecutive years regarding the Public Administration Reform Index (PAR Index) measured by the Government Steering Committee for Administrative Reform.

Sixthly, the SBV completed the legal framework on money and banking operations, contributing to perfecting the socialist-oriented market economy institutions. During the 2016-2020 term, the SBV developed and issued / submitted a large number of legal normative documents governing all aspects of banking activities to competent authorities, creating a legal corridor that is increasingly transparent and closer to international practices and standards.

In the term of 2021-2025 and the following years, the whole banking system will continue to uphold its important achievements and focus on effectively implementing the monetary policy management measures and banking operations.

1. Persist with the goal of controlling inflation and maintaining macroeconomic stability; proactively, prudently and flexibly manage monetary policy measures and tools, in coordination with other macroeconomic policies, especially the fiscal policy, to promote flexible response and enhance the economy’s resilience to the world’s economic and monetary upheavals; and increase state foreign exchange reserves when market conditions are favourable and create buffer reserves to withstand shocks, contributing to strengthening the economy’s self-reliance and independence in the process of international economic integration.

2. Synchronously carry out measures to shift the foreign currency mobilization and lending relationship between credit institutions and borrowers to the foreign currency trading relationship to further reduce the dollarisation of the economy; cautiously and appropriately deploy a roadmap for the gradual liberalisation of Vietnam’s capital transactions.

3. Continue to take measures to remove difficulties for businesses and people, support post-pandemic economic recovery, and promote sustainable economic growth; expand credit loans for production and business areas, especially those prioritised under the Government’s guideline; and keep strict credit control regarding the areas with potential risks to ensure operational safety.

4. Strengthen inspection and supervision of credit institutions’ activities, especially in the areas with high potential risks; monitor and promptly grasp risky abnormal developments in order to offer recommendations and warning to credit institutions for prompt handling to prevent and limit risks in their operations.

5. Focus on completing the tasks of developing non-cash payments in Vietnam and promoting innovation and the application of Industry 4.0 achievements in payment activities.

6. Effectively implement administrative procedure reform and the Government’s resolution on e-Government development; renew working methods to improve efficiency and create favourable conditions for businesses and people; and strengthen credit information activities to improve its coverage.

7. Proactively and actively promote international cooperation and integration, as well as bilateral and multilateral cooperation in the banking sector.

8. Perfect the banking legal institutions, with a focus on reviewing and researching the possibility of amending and supplementing the Law on the SBV, the Law on Credit Institutions, the Law on Deposit Insurance; the Law on Prevention of Money Laundering, thus creating a synchronous legal base, ensuring the safety of the banking system, and strengthening the implementation of Vietnam’s international commitments in the banking sector.