The State Bank of Vietnam (SBV) has just sent the National Assembly a report on the implementation of Resolution No. 62/2022/QH15 on questioning activities in the banking sector, which mentioned the progress of amending Decree 24/2012/ND-CP (Decree 24) on the management of gold trading activities.
Dealing with high gold price differences
According to SBV, in order to summarize and evaluate Decree 24, SBV has recently organized meetings to collect opinions from subjects affected by the policy, experts and National Assembly deputies; collect written opinions on the Draft summary and evaluation of Decree 24, supplementing international experience. SBV has submitted to the Prime Minister Report No. 28/TTr dated March 20 on the summary and evaluation report on the implementation of Decree 24, in which, it proposed 4 groups of solutions and 2 groups of recommendations, to perform the function of managing the gold market in the coming time.
The SBV has coordinated with ministries, branches and localities to comprehensively deploy solutions to handle the high gold price difference, stabilize the gold market, and contribute to stabilizing the macro-economy; and instructed localities to coordinate with competent authorities to strengthen the inspection and supervision of gold trading activities at the grassroots level.
In addition, the SBV has requested credit institutions (CIs) and enterprises licensed to trade in gold bars to strictly comply with legal regulations on gold trading activities; implement the invoice and voucher regime in accordance with the law; request the Ministry of Public Security, the Ministry of Industry and Trade, and the Ministry of Finance to strengthen inspection, supervision and monitoring according to their assigned functions, tasks and powers; strictly handle violations of the law such as smuggling gold across the border, manipulation, profiteering... causing instability in the gold market.
Based on current legal regulations, SBV has also organized direct gold bar auctions to supplement the supply of SJC gold bars to the market; coordinated with the Ministry of Public Security and local authorities to ensure security and order, and ensure the effectiveness of intervention plans.
“With the SBV’s synchronous solutions and the effective coordination of functional agencies, the gap between domestic and world gold prices has been controlled and maintained within a suitable range. The gold market has stabilized, contributing to actively supporting the foreign exchange market, exchange rates and the management of macroeconomic policies,” the SBV report stated.
Gold stabilization solution is not really sustainable
According to economist Ngo Tri Long, since the end of 2023, the domestic gold market has been in turmoil. Domestic gold prices have increased due to the sharp increase in world gold prices and the imbalance between supply and demand, and limited supply, pushing gold prices up.
To help solve the shortcomings of the gold market, Mr. Ngo Tri Long suggested that in an urgent solution, the authorities should allow official gold imports to solve the problem of supply shortage. SBV will only import enough gold to stabilize the market when the balance of payments has a relatively good surplus and the exchange rate pressure is reduced. “The current stabilization solution of SBV has not yet satisfactorily solved the people's demand for gold in terms of quantity. It is not easy for people to buy large quantities, because gold stabilization units sell in limited quantities,” said Mr. Ngo Tri Long.
Therefore, it is necessary to urgently amend Decree No. 24 on gold trading. Authorities need to create a distribution system in the market, allowing people to have favorable trading conditions, creating an equal playing field for all economic sectors.
Dr. Nguyen Tri Hieu said that the current political and military conflicts in Ukraine, the Middle East and the US presidential election have had an impact on boosting the world gold price, because investors see gold as a safe haven against the crisis. In addition, many central banks continue to buy gold to increase national reserves, especially in the context of global economic instability and fluctuations in foreign currencies. Gold is still considered an important and stable component of the national reserve portfolio.
“The long-term solution for sustainable management of the gold market is still to amend Decree 24 in the direction that the SBV assigns gold import to reputable and financially capable gold traders, focusing on the role of a manager instead of directly participating in the gold market. As a manager and supervisor of the gold market, the SBV assigns gold import targets to gold traders licensed by the SBV to import. In addition, it is necessary to establish a national gold exchange and allow gold investment funds to issue gold certificates; at the same time, encourage people to invest in these funds instead of keeping physical gold in their own homes," Dr. Nguyen Tri Hieu proposed.
On the afternoon of October 22, the increase in gold rings has not yet decreased, the price of gold rings has nearly exceeded 87.5 million VND/tael in the selling direction. Compared to the end of the afternoon session on October 21, this level has increased by 800,000 VND/tael in both buying and selling directions. Compared to the beginning of the year, the price of gold rings has increased by about 24 million VND/tael, equivalent to an increase of about 38%. This is the highest increase ever for gold rings.
According to Tin Tuc Newspaper
Source: https://doanhnghiepvn.vn/kinh-te/ngan-hang-nha-nuoc-thong-tin-tien-do-sua-nghi-dinh-24-cp-quan-ly-thi-truong-vang/20241023065402265
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