The State Bank of Vietnam
a snapshot of monetary policy during 2011 – 2013 in reviews
Using the data and analytical works collected from a public domain which including printed and online newspapers, financial magazines and public reports on the monetary policy of the State Bank of Vietnam during 2011 to 2013, this study provide a snap‐shot of the Vietnam Economy in the views of monetary policy. The students is also provides analytical works where these policy linkage to knowledge which obtain from Macro Economic subject This paper prepared by
Trịnh Quang Vinh
Nguyễn Tuấn Long
Đỗ Văn Kiên
Đoàn Phan Quang
Đinh Ngọc Khánh
Le Thi Thanh Hoa
under general guidance of Dr. Vu Pham Hai Dang – Lecture of University of Economics – Hanoi National University. This paper prepared within a frame work of Macro Economic subjects of the MBA program of Benedictines University.
The paper was submitted on 26 January, 2014 for reviews.
The world is facing a global economic crisis. Vietnam in the context of world economic
integration cannot avoid these influences. In the past three years, the economy of Vietnam has faced many difficulties such as high inflation, stagnant production, business enterprise shuts down and
bankruptcy, real estate market has been frozen and
so on. Remarkably, there were times when the annual Bank’s loan interest rates escalated to 22‐ 24%, Vietnam Dong depreciated, the foreign
exchange reserves were particularly low, and several commercial banks were liable to falling into risks due to the weakness of banking system. Meanwhile, the
world market, which was so complex because of the
debt crisis of several major economies and political unrest in many countries, also had negative impact on Vietnam economy. These facts require that monetary policy needs to be flexible. In nearly 3 years, monetary policy has played an important role to reestablish macroeconomic stability. The focus of monetary policy is stabilizing the value of Vietnam Dong which is relative to the inflation rate, exchange rate, increasing the economic growth, removing
difficulties for entrepreneurs, ensuring the safety of the banking system. Along with fiscal policy in cutting taxes and interest rate support, monetary policy has created positive effects on the restructuring process, allocation of capital flows into the prior sectors. This essay will determine the monetary policies which have been taken in order to revive the economy, and also discuss about the effects and efficiency of these policies based on the knowledge of macroeconomics.
Page | 1
MONETARY POLICIES OF THE STATE BANK OF VIETNAM
The state bank of Vietnam (SBV) has used a tight control monetary policy to curb the inflation and assist macroeconomic stability.
In 2011, SBV implemented strong measures in order to control the rate of credit growth below 20%, total money supply M2 at 15‐16%, and adjust credit structure by concentrating on agricultural production, exports, and supporting small and medium‐sized businesses. Entering 2012, the mission of SBV was specified that monetary policy needs to be tight, cautious, flexible and coordinated with fiscal policy to stabilize the currency market, and control the total money supply M2 and credit growth about 14‐16% and 15‐17% respectively. The SBV has set a target of reducing the interest rates to 9‐10%/year at the end of 2012, and average decreasing rate of 1% per quarter. However, under the rapid downward trend in inflation, the SBV has adjusted the interest rates 6 times and reduce Dong deposit rate cap faster than ...
References: Developments” Hanoi, December 2013
Economist Intelligence Unit, “Vietnam Country Report” January 24, 2014
Please join StudyMode to read the full document