Gov’t asserts people’s right to own gold bars
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The people’s right to own and trade in gold is protected by the government but gold bullion bars can only be traded at government-appointed dealers, said Deputy Prime Minister Nguyen Sinh Hung at a Thursday meeting with the National Advisory Council for Financial and Monetary Policies.
* Existing gold shops will only be allowed to trade in gold jewelry
* People can only trade in gold bullion bars at government-appointed outlets
* People have full rights to own, store gold
* Gold will be banned as a means of payment
Dr. Tran Hoang Ngan, a member of the council, said the council supported the government regarding its decision to ban gold bullion trading on the free market in the future in an effort to stabilize macro-economy.
But since the information has not been clearly publicized, it has caused panic among people, many of whom wrongly thought they would be banned from owning and trading in gold bullions altogether.
How will the government’s decision be realized?
First thing first, the government will restructure the domestic gold market so that we will have an organized network of importers and dealers.
There will be a government-appointed national gold company acting as an importer-exporter to guarantee that the gap between the international and domestic gold price will be narrowed as much as possible, and a network of authorized dealers which will work directly with the gold company.
The new network will prevent gold smugglers from destabilizing the market as they have done recently.
The network of authorized dealers, including banks and companies licensed by the State Bank of Vietnam, will be the place where gold is traded. Gold trading will be a conditional business for which the licensing will be stricter, while existing gold shops will only be allowed to trade in gold jewelry.
There is rumor that gold will be banned as a means of payment…
It is the same with the ban in using foreign currencies as a means of payment as we did in the past so that the price listing of valuable properties or goods will be in the Vietnam dong, and there is no conflict with the gold ownership right.
As gold prices have fluctuated so fiercely recently, people have started not to list prices in the form of the precious metal.
What decision came out from the meeting about tackling the dollar supply for those who want to travel abroad for studying or medical treatment?
Banks will be allowed to charge those who need dollars for such purposes a small sum of fees since it is unprofitable transactions to trade the green back at the listed price. It is the reason why banks have recently refused to sell the dollar.
Since the government has determined to scrap the dollar black market and reorient the people towards trading the greenback legally at banks, this will be a chance for banks to regain its market shares.
Are there more solutions to stabilize the forex rate and the domestic foreign currency market?
The ultimate goal is to prevent the domestic market from dollarization, so there will be both short-term and long-term solutions for this.
The short-term ones include curbing the dollar black market, limiting massive dollar lending in a short period of time to relieve the pressure on the forex rate, and asking state conglomerates to sell the greenbacks to the banking system.
The long-term ones, aiming at reducing dollar hoarding and lending, include a ceiling interest rate for dollar depositing, asking banks to raise the compulsory reserve in US dollars. This will detract greenback hoarding and depositing, while lending in dollars will be costlier, thus making the dong more attractive in depositing and lending.
There are also opinions at the meeting that the government should apply more economic solutions to managing the macro-economy by cutting inefficient public spending.
Nguyen Thanh Long, chairman of Vietnam Gold Traders Association, has proposed the central bank set up a national gold fund to stabilize the domestic market. It will act as the national gold company, the main gold importer-exporter which will interfere in the market if necessary. |
