Need to manage the monetary policy under tendency of more "market"

	Finance sector: Striving to increase revenue by 5% compared to the 2019 estimate
	Credit collection contributes to lower and lower proportion of total banking activities
	Credit in the first 5 months up by 6.16%

The economic expert Dr. Can Van Luc, Director of BIDV Training and Research Institute

How do you assess the management of the SBV's monetary policy in the first quarter of 2019?

In my opinion, in general, the monetary policy management of the SBV continued to be relatively flexible to help the exchange rate and credit market operate stably. In addition, monetary policy continues to coordinate well with fiscal policy, contributing to controlling inflation at a relatively low level, in line with the requirements of the National Assembly and the Government. Besides, the SBV has actively implemented the Government's requirements under Resolution 01 and 02 set at the beginning of the year. The State Bank also has some solutions to promote non-cash payment, as well as some solutions to promote formal credit, reduce black credit ... The State Bank has also started to build a legal corridor for digital banks in the context of the Industrial Revolution 4.0 ...

However, in addition to the above mentioned aspects, in the coming time, the State Bank still need to pay attention to some issues.

Firstly, it is necessary to accelerate the restructuring of credit institutions, especially weak credit institutions. But it is clear that in order to do this, it is not the State Bank that can do it alone but needs the help of many parties. Secondly, it is necessary to have a focal point to coordinate and solve problems of bad debt handling according to the Resolution 42/2017 / QH14 of the National Assembly, thereby speeding up the process of handling bad debts, ensuring follow requirements of Decision No. 1058 / QD-TTg approving the scheme "Restructuring the system of credit institutions associated with the handling of bad debts in 2016-2020" of the Prime Minister.

The State Bank stated that it would prioritise credit growth with credit institutions implementing the regulations on capital safety in Circular 41/2016 / TT-NHNN. How does this affectcredit growth?

This is also one of the SBV's operating tools to promote credit institutions to reach Basel II standards sooner. However, despite supporting this operation, in my opinion, this should only be a support solution for a certain period. The important thing is that the State Bank must have a mechanism and policies to operate in a more market-oriented fashion. The SBV may consider not applying the credit growth limit for banks, but move to apply more strictly the capital adequacy ratio (CAR) requirements. With this approach, credit institutions will naturally adjust the credit growth rate to ensure safety for banks in particular and the whole system in general.

At the end of this March, the SBV will start to tighten foreign currency loans.How will this impact businesses as well as markets?

Recently, the SBV has been actively implementing anti-dollar roadmaps and reducing foreign currency holding. Therefore, the roadmap to March 31 will stop the need for short-term foreign currency credit and by September 30, it will stop the demand for long-term foreign currency credit to pay abroad the import of goods and services to carry out production and business plans for domestic demand. It can be seen that these regulations have been announced early on in the implementation time, helping businesses manage and have certain preparation. Therefore, in the first quarter, enterprises took advantage of the time before March 31 to trade foreign currencies, making the foreign currency growth in the first quarter relatively fast, about 5-6%. But the banking system has mobilised a relatively good amount of foreign currency, up 5%, so there is no problem with foreign currency liquidity, stable exchange rate, creating conditions for SBV to increase the ability of buying foreign exchange reserves...

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However, the above foreign currency credit tightening will certainly impact the operation of enterprises. Therefore, in the long term, this requires an easier market for foreign currency trading, better liquidity so that whenever foreign currency is needed, businesses will implement trading relations rather than borrowing relationships of currency.