Vietnam
Vietnam[VND]
...
Institutional setup of monetary policy decisions and operations
| Policy decision body, size and composition | Department of Monetary Policy, in coordination with other units (Department of Forecasting and Statistics, Banking Supervision Agency, Legal Department, etc..) advises the Governor, Deputy Governor in charge about monetary policy decision making |
|---|---|
| Major mandates 1 | According to the Law on the State Bank of Vietnam of 2010, the State Bank of Vietnam is a ministerial-level agency of the Government and is the Central Bank of the Socialist Republic of Vietnam. The State Bank performs the function of State management over monetary, banking and foreign exchange activities; performs the function of a Central Bank in money issuance, the bank of credit institutions and provision of monetary services to the Government. The State Bank's activities aim to currency value stabilization; protection of the safety of banking operations and the system of credit institutions; protection of the safety and efficiency of the national payment system; contributing to promoting socialist-oriented socio-economic development 2 |
| Decision-making process | SBV's Management Board directs functional units to research and propose solutions in the monetary policy management process. At the same time, functional units actively give advice and proposals to the SBV's Management Board. 3 |
| Frequency / length of meetings | Not fixed |
| Frequency of announcements | Not fixed |
| Main policy target | Manage monetary policy instruments in proactive and flexible manner to control inflation, stabilize the macro-economy and reasonably support economic growth. |
Overview of key features
| Key policy rate | Refinancing rate: 4.0 percent p.a Rediscounting rate: 2.5 percent p.a Overnight rate for the inter-bank electronic payments, and the interest rate of loans to finance short-term balances in the clearing transactions between the SBV and the commercial banks: 5 percent p.a 4 |
|---|---|
| maturity (days) | |
| Operating target | No |
| maturity (days) | |
| Standing facilities | Yes |
| Corridor width (bp) | |
| Reserve requirements | Yes |
| maintenance period | one month |
| Main operation 5 | The State Bank of Vietnam conducts monetary policy tools in flexible and synchronous manner to stabilize the monetary and foreign exchange markets, control inflation, ensure liquidity for the economy, and support growth. |
| functions | |
| maturity (days) | |
| regular interval | |
| frequency | |
| Overall frequency | As above |
| Discretion left to operational desk | As above |
| Key policy signals via | No |
| announcement | |
| keynote tender | |
| standing facility | |
| other |
Monetary policy communication
| Explicit use of forward guidance | Not applicable |
|---|---|
| Timing / media of policy announcement | The mechanisms and policies of the State Bank are promptly, clearly and systematically communicated. In addition to the official communication channels such as the Central Bank's website, press conferences, seminars, workshops, symposiums, SBV's communication also covers the National Assembly delegates, Government agencies, the press, enterprises, investors, economic experts, etc. |
| Policy announcement and documents | As above |
| Explaining policy decisions | As above |
| Dissemination of minutes (timing / media) | As above |
| Content of minutes | As above |
| Publication of forecasts 6 | The State Bank of Vietnam makes a report to the Government on setting inflation targets so that the Government submits to the National Assembly for approval on annual basis. The State Bank does not directly publish or announce to the public about its macroeconomic, inflation or monetary policy forecasts |
| Publication of projected path of policy rate 7 | The State Bank does not forecast policy interest rates |
Reserve requirements: ratios and size
| Main functions served | Monetary policy tools 8 |
|---|---|
| Domestic currency | Deposits of less than 12-month maturity: 3 percent, 12-month maturity and above 1 percent 9 |
| Foreign currency | Deposit of less than 12-month maturity: 8 percent, 12-month maturity and above: 6 percent, deposit by foreign credit institutions: 1 percent 10 |
| Average | On average, required reserve in VND accounts for 2 percent and that in foreign currency accounts for 7 percent of the deposit outstanding used to calculate required reserve. |
| Required reserves | SBV's trading desk does not publicise this figure |
| Required reserve as % of GDP | As above |
| Actual reserves | As above |
| Actual reserve as % of GDP | As above |
Main features of reserve requirements
| Averaging | Yes 11 |
|---|---|
| Carry-over | No |
| Type | Deposit at the State Bank of Vietnam 12 |
| Maintenance period | One month 13 |
| end (day) | The last day of a month |
| Calculation period | One month 14 |
| end (day) | The last day of a month |
| Lag before maintenance | One month 15 |
| Vault cash | No 16 |
| restrictions | Not Applicable |
| Remuneration | According to monetary policy objectives 17 |
| average rate | |
| marginal rate | |
| Framework last changed | 2003 |
Liquidity position and forecasting
| Structural Position | Generally, liquidity is guaranteed |
|---|---|
| Most volatile factor(s) | - Cash, due to the seasonality of citizens' cash holding - Government spending |
| Most unpredictable factor(s) | Government spending; cash |
| Forecast horizon(s) | Daily, monthly |
| Frequency | Daily, monthly |
| Frequency of revision | Daily, monthly |
| Forecast published? | No |
Standing facilities: lending / market ceiling
| Name | Refinancing 18 |
|---|---|
| Form | Valuable papers-mortgaged lending 19 |
| Pricing method | SBV's refinancing rate 20 |
| Maturity | Below 12-month 21 |
| Access limited by/to | Credit institutions established and operating under the Law on Credit Institutions; having qualified valuable papers and on the list of valuable papers used as collateral to borrow money from the State Bank in accordance with the regulations of the Governor of the State Bank of Vietnam, with the purpose of borrowing being in line with the SBV's objectives of monetary policy conduction in each period; and having no overdue debts with the State Bank 22 |
| Function(s) | To provide short-term capital and liquidity to credit institutions 23 |
Standing facilities: deposit / market floor
| Name | Not applicable |
|---|---|
| Form | Not applicable |
| Pricing method | Not applicable |
| Maturity | Not applicable |
| Access limited by/to | Not applicable |
| Function(s) | Not applicable |
Open market operations: repo or reverse repo
| Name/Type 24 | RP, RRP, Outright transaction 25 |
|---|---|
| Maturity | Determined by the SBV |
| Frequency | OMOs are executed on a working day. If the date of redemption or the due date of the securities does not coincide with the working day, the payment and transfer of ownership of the securities shall be made immediately on the next working day, from which interest payment will be calculated 26 |
| Pricing method | 1. When buying or selling with a term 1.1. Securities at the time of valuation 1.1.1. For short-term securities: a) Interest payment immediately upon issue: G = MG / ((1+ (L * t) / 365)) G: Value of securities at the valuation time MG: Face value of securities L: Interest rate by method of unit price or multi-price bidding (in case of auction with interest rate) or the interest rate announced by the State Bank (in case of auction by volume) at the auction (% / year) t: Remaining term of securities (number of days). b) Short-term securities, with lump-sum principal and interest payment: G = GT/((1+ (L * t) / 365)) Inside: G = MG * (1+ (Ls * n) / 365) G: Value of securities at the valuation time GT: Value of securities at maturity including face value and interest MG: Face value of securities L: Interest rate by method of unit price or multi-price bidding (in case of auction with interest rate) or the interest rate announced by the State Bank (in case of auction by volume) at the auction (% / year) t: Remaining term of securities (number of days) Ls: Interest rate for securities (% / year) n: Term of securities (number of days). 1.1.2. For long-term securities: a) For long-term securities, pay interest immediately upon issue: G = MG / 〖(1 + L)〗 ^ (t⁄365) Inside: G: Value of securities at the valuation time MG: Face value of securities L: Interest rate by method of unit price or multi-price bidding (in case of auction with interest rate) or the interest rate announced by the State Bank (in case of auction by volume) at the auction (% / year) t: Remaining term of securities (number of days). b) For long-term securities with lump-sum payment of principal and interest (interest without principal): G = GT / ((1+ (L * t) / 365)) Inside: GT = MG * [1 + (Ls * n)] G: Value of securities at the valuation time GT: Value of securities at maturity, including face value and interest MG: Face value of securities L: Interest rate by method of unit price or multi-price bidding (in case of auction with interest rate) or the interest rate announced by the State Bank (in case of auction by volume) at the auction (% / year) t: Remaining term of securities (number of days) Ls: Interest rate for securities (% / year) n: Term of securities (year). c) For long-term securities with lump-sum payment of principal and interest (interest on principal): G = GT / 〖(1 + L)〗 ^ (t⁄365) Inside: GT = MG * (1 + Ls) n G: Value of securities at the valuation time GT: Value of securities at maturity, including face value and interest MG: Face value of securities L: Interest rate by method of unit price or multi-price bidding (in case of auction with interest rate) or the interest rate announced by the State Bank (in case of auction by volume) at the auction (% / year) t: Remaining term of securities (number of days) Ls: Interest rate for securities (% / year) n: Term of securities (year). d) For long-term valuable papers, with periodic interest payment: G = ∑_ (i, Ti> 0) ▒Ci / 〖(1 + L / k)〗 ^ (((Ti * k)) ⁄365) Inside: G: Value of securities at the valuation time Ci: Amount of the ith payment of interest and principal (excluding the amount of interest, principal with the last day of interest registration, original securities before the valuation date). i: The ith time of interest and principal payment L: Interest rate by method of unit price or multi-price bidding (in case of auction with interest rate) or the interest rate announced by the State Bank (in case of auction by volume) at the auction (% / year) Ti: Term is from the valuation date to the first interest and principal payment due date (number of days). k: Number of periodic interest payments in a year. 1.2. Payment price between the State Bank and a member is determined by the following formula: GTT = G * (1 - h) Inside: GTT: Payment price G: Value of securities at the valuation time h: Ratio of the difference between the securities value at the valuation time and the payment price. 1.3. The price for redemption of securities between the State Bank and its members is determined by the following formula: Gm = GTT * (1+ (L * tb) / 365) Inside: Gm: Redemption price GTT: Payment price L: Interest rate by method of unit price or multi-price bidding (in case of auction with interest rate) or the interest rate announced by the State Bank (in case of auction by volume) at the auction (% / year) tb: Buying and selling term (number of days). 1.4. The right to enjoy periodic interest and other income (if any) from securities in term purchase and sale transactions belongs to the Seller. In case the Buyer receives periodic interest and other income (if any) at the time (s) within the term of the time purchase or sale transaction, the Buyer is responsible for returning the Seller the interest periodic and other income (if any) received at the date of acquisition. The periodical interest and other income (if any) from securities in the term purchase and sale will not enjoy interest while the Buyer keeps it on behalf of the Buyer. 2. In case of outright purchase or outright sale of securities: The price of outright purchase or outright sale of securities between the State Bank and its members is applied as prescribed in Point 1.1, Clause 1 of this Article. 27 |
| Access limited by/to | Credit institutions, foreign bank branches (except microfinance institutions, people's credit funds) will be recognized as members when fully satisfying the following conditions: 1. Have a Vietnamese dong payment account at the State Bank. 2. To have a bank code issued by the State Bank. 28 |
| Function(s) | To serve the objectives of operating monetary policy in each period |
Open market operations: central bank bills
| Name | State Bank bills 29 |
|---|---|
| Total issuance | The total issuance volume depends on the orientation and objectives of the monetary policy in each period |
| Maturity | The term of bills of the State Bank shall be decided by the State Bank and shall not exceed 364 days. 30 |
| Restrictions on possible maturities | No |
| Pricing method | The selling price of one (01) State Bank bill is determined by the following formula: Inside: G: Selling price of one (01) State Bank bill; MG: Face value of State Bank bills; L: Interest rate for State Bank bills (% / year); t: Term of the State Bank's bills (number of days). 2. The amount for sale of the State Bank's bills is determined by the following formula: GG = G x N Inside: GG: Amount of money from the sale of State Bank bills; G: Selling price of one (01) State Bank bill; N: Number of treasury bills issued by the State Bank. 31 |
| Access limited by/to | Credit institutions |
| Discretion left to operational desk | No |
Open market operations: FX swaps
| Maturity | The State Bank used to implement FX Swap with credit institutions, but stopped according to Circular 05/2019/TT-NHNN 32 |
|---|---|
| Frequency | As above |
| Pricing method | As above |
| Access limited by/to | As above |
| Function(s) | As above |
Other significant liquidity management means
| Name/Type 33 | OT: Regulations in Circular 42/2015/TT-NHNN on OMOs (Circular 42) as amended and supplemented by Circular No. 09/2021/TT-NHNN dated 07/07/2021; Circular 16/2019/TT-NHNN |
|---|---|
| Form | OT: Regulations in Circular 42/2015/TT-NHNN on OMOs (Circular 42) as amended and supplemented by Circular No. 09/2021/TT-NHNN dated 07/07/2021; Circular 16/2019/TT-NHNN |
| Frequency | OT: Regulations in Circular 42/2015/TT-NHNN on OMOs (Circular 42) as amended and supplemented by Circular No. 09/2021/TT-NHNN dated 07/07/2021; Circular 16/2019/TT-NHNN |
| Maturity | OT: Regulations in Circular 42/2015/TT-NHNN on OMOs (Circular 42) as amended and supplemented by Circular No. 09/2021/TT-NHNN dated 07/07/2021; Circular 16/2019/TT-NHNN |
| Pricing Method | OT: Regulations in Circular 42/2015/TT-NHNN on OMOs (Circular 42) as amended and supplemented by Circular No. 09/2021/TT-NHNN dated 07/07/2021; Circular 16/2019/TT-NHNN |
| Access limited by/to | OT: Regulations in Circular 42/2015/TT-NHNN on OMOs (Circular 42) as amended and supplemented by Circular No. 09/2021/TT-NHNN dated 07/07/2021; Circular 16/2019/TT-NHNN |
| Function(s) | OT: Regulations in Circular 42/2015/TT-NHNN on OMOs (Circular 42) as amended and supplemented by Circular No. 09/2021/TT-NHNN dated 07/07/2021; Circular 16/2019/TT-NHNN |
Settlement systems and intra-day liquidity facilities
| Settlement system | SBV's trading desk does not publicise this details |
|---|---|
| Intra-day liquidity facility | Overdrafts and overnight lending in interbank electronic payments 34 |
| Charge | SBV's trading desk does not publicise this details |
| Foreign currency settlement system | As above |
| CLS participation by banks | As above |
| Other settlement system(s) | As above |
Collateral
| Standing facilities: List of eligible collateral | Securities used in transactions with the State Bank: - SBV bills - Government bonds, including: Treasury bills/ Treasury bonds/ Central project bonds/ Government bonds issued by the Vietnam Development Bank (formerly Vietnam Development Fund) per request of the the Prime Minister - Bonds guaranteed by the Government, including: Bonds issued by the Vietnam Development Bank and guaranteed by the Government for payment of 100% of the principal and interest value upon maturity; Bonds issued by Vietnam Bank for Social Policy are guaranteed by the Government for payment of 100% of the principal and interest value upon maturity; Bonds issued by VEC by the Government for payment of 100% of the principal and interest value upon maturity; - Local Government bonds issued by the People's Committee of Hanoi and the People's Committee of Ho Chi Minh City; the People's Committee of Da Nang City |
|---|---|
| Standing facilities: Discretion of central bank on collateral 35 | According to the decision of the Governor in different points in time |
| Open market operations: List of eligible collateral | List of securities used in transactions with the State Bank is specified in Decision 11/QD-NHNN 2010 |
| Open market operations: Discretion of central bank on collateral 36 | The addition to the portfolio of securities to be used in transactions with the State Bank is stipulated in Decision 11/QD-NHNN in 2010 and other decisions on amendments and supplements. |
Dissemination of operational information: liquidity forecast
| Forecast published? | No |
|---|---|
| Channel(s) | No |
| Timing | No |
| Remarks | No |
Dissemination of operational information: open market operations
| Volume and price published? | Depending on the method of bidding: OMOs are done through volume bidding or interest rate bidding. Based on the objective monetary policy in different points in time, the State Bank shall select an appropriate bidding method. 1. Volume bidding a) The State Bank shall notify members of the interest rate for buying or selling securities; b) The State Bank decides to announce or not to announce the volume of securities to be purchased or sold by the State Bank in the bidding notice of each transaction session of the OMOs; 2. Interest rate bidding a) The State Bank decides to announce or not to announce the volume of securities to be purchased or sold by the State Bank in the bidding notice of each transaction session of the OMOs; b) The State Bank shall decide the application of the unit price or multi-price bidding consideration method; c) A member registers to bid based on the interest rates (maximum of 3 interest rates for a term of buying and selling securities in a bid) and quantity of securities to be purchased or to be sold corresponds to those interest rates. The bid rate is calculated at the as %/year and rounded to 2 decimal places; d) The member's bid applications are ranked in the order of decreasing bid interest (in case the State Bank purchases securities), or the bid interest rate increases (in case the State Bank sells securities); đ) The State Bank shall consider the bid in descending order from the highest bidding interest rate to the lowest tender interest rate (in case the State Bank buys securities) or consider the bid in ascending order from lowest bid interest rate up to the highest bid rate (in case the State Bank sells securities) within the minimum or maximum bid consideration interest rate of the State Bank at which the preferred quantity of securities is reached; (i) For the unit price bidding method: The winning interest rate is the lowest bid interest rate (in case the State Bank buys securities) or the highest bid interest rate (in case the State Bank sells securities) within the minimum or maximum bid consideration interest rate of the State Bank at which the volume of securities to be purchased or sold by the State Bank is reached; (ii) For multi-price bidding consideration method: The winning interest rate of each winning member is the bidding interest rate of that member; e) Winning volume of members is the volume of the bid levels with an interest rate equal to and higher than the winning interest rate (in case the State Bank buys securities) or has a bid interest rate equal to and lower than the winning interest rate (in case the State Bank sells securities); g) If at the winning interest rate, the total bid volume of the members exceeds the remaining volume of securities to buy or sell of the State Bank, the winning volume of each member shall be awarded proportionally to the bid volume of each member at the winning interest rate and corresponding to the volume of securities calculated according to par value rounded down to multiples of the par value of securities; h) In case at the winning interest rate of a member, there are many types of securities that need to be purchased or sold, the State Bank shall consider the bid to determine according to the order of each securities as specified in Point e, Clause 1 of this Article. 37 |
|---|---|
| Channel(s) | OMO professional bidding software AOM |
| Timing | Daily |
Dissemination of operational information: standing facilities
| Lending facility usage: Channel(s) | Securities mortgaged-back lending |
|---|---|
| Lending facility usage: Timing | Within 02 working days since the date of receipt of credit institutions' document for mortgage borrowing 38 |
| Deposit facility usage: Channel(s) | Not applicable |
| Deposit facility usage: Timing | Not applicable |
Other information dissemination
| Type | No |
|---|---|
| Channel(s) | No |
| Timing | No |
1 Describe as well the legal status of the mandate and involvement of government
2 The Law on the State Bank of Vietnam of 2010 (Law No. 46/2010/QH12)
3 Decree No. 16/2017/ND-CP on functions, responsibilities, authorities and organizational structure of the State Bank of Vietnam
4 Decision No. 1728/QD-NHNN dated September 30, 2020
5 RP = reversed purchase (repo, inject liquidity), RS=RRP=reversed sale (reverse repo, absorb liquidity), RT=reversed transaction (repo or reverse repo).
6 For instance, economic and inflation forecasts related to policy decision.
7 If applicable, describe the publication of any fan-charts or uncertainty bands around the forecasts/projections.
8 2010 Law on the State Bank of Vietnam, Decree No. 30/2019/TT-NHNN dated December 27, 2019
9 Decision No. 1158/QD-NHNN of the Governor of the State Bank of Vietnam dated May 29, 2018 on required reserve ratio applied for credit institutions and foreign bank branches, valid from June 1, 2018
10 Decision No. 1158/QD-NHNN of the Governor of the State Bank of Vietnam dated May 29, 2018 on required reserve ratio applied for credit institutions and foreign bank branches, valid from June 1, 2018
11 Circular No. 30/2019/TT-NHNN dated December 27, 2019 providing for the implementation of required reserve by credit institutions and foreign bank branches
12 2010 Law on the State Bank of Vietnam, Circular No. 30/2019/TT-NHNN dated December 27, 2019 providing for the implementation of required reserve by credit institutions and foreign bank branches
13 Circular No. 30/2019/TT-NHNN dated December 27, 2019 providing for the implementation of required reserve by credit institutions and foreign bank branches
14 Circular No. 30/2019/TT-NHNN dated December 27, 2019 providing for the implementation of required reserve by credit institutions and foreign bank branches
15 Circular No. 30/2019/TT-NHNN dated December 27, 2019 providing for the implementation of required reserve by credit institutions and foreign bank branches
16 Circular No. 30/2019/TT-NHNN dated December 27, 2019 providing for the implementation of required reserve by credit institutions and foreign bank branches
17 Circular No. 30/2019/TT-NHNN dated December 27, 2019 providing for the implementation of required reserve by credit institutions and foreign bank branches
18 2010 Law on the State Bank of Vietnam, Circular No. 17/2011/TT-NHNN dated August 18, 2011 as amended and supplemented by Circular No. 37/2011/TT-NHNN dated December 12, 2011
19 Circular No. 17/2011/TT-NHNN dated August 18, 2011 as amended and supplemented by Circular No. 37/2011/TT-NHNN dated December 12, 2011
20 Circular No. 17/2011/TT-NHNN dated August 18, 2011 as amended and supplemented by Circular No. 37/2011/TT-NHNN dated December 12, 2011
21 Circular No. 17/2011/TT-NHNN dated August 18, 2011 as amended and supplemented by Circular No. 37/2011/TT-NHNN dated December 12, 2011
22 Circular No. 17/2011/TT-NHNN dated August 18, 2011 as amended and supplemented by Circular No. 37/2011/TT-NHNN dated December 12, 2011
23 2010 Law on the State Bank of Vietnam
24 RP=Reversed purchase (“repo”), RS=RRP=Reversed Sales (“reverse repo”), RT=Reversed transaction (RP or RRP).
25 Regulations in Circular 42/2015/TT-NHNN on OMOs (Circular 42)
26 Article 12 Circular 42
27 Article 12 Circular 42
28 Article 5 Circular 42
29 Regulations in Circular 42/2015/TT-NHNN on OMOs (Circular 42) and Circular 16/2019/TT-NHNN on issuance of SBV bills (Circular 16)
30 Clause 3 Article 4 Circular 16
31 Article 5 Circular 16
32 - Decision 893/2001/QD-NHNN of the Governor of the State Bank of Vietnam on the implementation of a swap between the SBV and a credit institution to meet the demand for short-term capital in VND for banks. Circular 15/2019/TT-NHNN repeals all of Decision 893/2001/QD-NHNN.
- FX swap transactions between the SBV and credit institutions are now regulated under Circular 01/2014/TT-NHNN.m (this circular was declassified) on guilding operations of foreign exchange reserve managment activities, amended and supplemented by Circular 01/2020/TT-NHNN.
33 OT = Outright Transaction, DB = Direct Borrowing, DL = Direct Lending.
34 As regulated in Circular No. 29/2016/TT-NHNN dated October 12, 2016 regulating overdraft and overnight lending in interbank electronic payments
35 Discretion of the central bank to expand collateral types, and list of additional collateral types that the central bank can take on a discretionary basis. Also, additional information such as delays required if discretionary collateral changes.
36 Discretion of the central bank to expand collateral types, and list of additional collateral types that the central bank can take on a discretionary basis. Also, additional information such as delays required if discretionary collateral changes.
37 Regulations in Circular 42/2015/TT-NHNN on OMOs (Circular 42) as amended and supplemented by Circular No. 09/2021/TT-NHNN dated 07/07/2021
38 Circular No. 17/2011/TT-NHNN dated 18/8/2011 as amended and supplemented by Circular No. 37/2011/TT-NHNN dated 12/12/2011