Governor Nguyen Thi Hong: Will establish gold trading floor 'at the right time'

To establish a gold trading floor, the Governor said the State Bank will work with ministries and branches to carefully research and assess the impact to advise and propose to the Government at the appropriate time.

Ms. Nguyen Thi Hong - Governor of the State Bank answers questions from National Assembly deputies. (Photo: Vietnam+)

On the morning of November 11, Ms. Nguyen Thi Hong - Governor of the State Bank opened the National Assembly's question-and-answer session.

The questioning focused on issues related to monetary policy management to control inflation in the context of a volatile world economic situation.

However, many questions from delegates focused on the issue of gold market management, people having difficulty buying and selling gold, whether or not to establish a gold exchange...

Low demand for gold in the provinces

Delegate Luu Van Duc (National Assembly Delegation of Dak Lak Province) and Delegate Pham Van Hoa (National Assembly Delegation of Dong Thap Province) asked the Governor of the State Bank to clarify the solutions for managing the gold market in recent times. Delegate Pham Van Hoa questioned why the Big 4 banks (Vietcombank, VietinBank, BIDV, Agribank) only sell but do not buy while many other gold trading enterprises in the market do not buy, causing difficulties for people not only when buying gold but also when selling gold. In addition, the delegates also asked the Governor to explain why the Big 4 only sell gold in Hanoi and Hanoi City but do not expand to the provinces.

Responding to questions from delegates, Governor Nguyen Thi Hong said that the Vietnamese gold market always fluctuates according to general developments in the world. Since 2012, the State Bank has advised the Government to issue Decree 24/2012/ND-CP on gold market management. However, since 2021, world gold prices have increased sharply. By June 2024, the difference between domestic and world gold prices will reach 15-18 million VND/tael. Under the Government's strong direction and on the basis of current laws, the State Bank has organized gold auctions.

According to the Governor, the gold auction measure was effectively implemented by the State Bank in 2013. However, in the new context, the world gold price reached a very high peak, the market's expectation increased sharply, so after 9 auctions, when the difference between domestic and international gold prices was still high, the State Bank switched to selling gold directly to state-owned commercial banks (big 4 banks) and SJC Company. Thanks to that, the gold price difference has decreased rapidly, now only 3-4 million VND/tael.

Although the goal of reducing the gap between domestic and international gold prices has been partly achieved, the Governor admitted that the gold market is still complicated, and Vietnam is a country that does not produce gold, and its supply is completely dependent on imports. Therefore, the State Bank will continue to closely monitor the gold market in the coming time to have intervention solutions.

Regarding the representative's reflection that commercial banks only sell but do not buy gold while some gold shops do not buy gold, the Governor affirmed that the State Bank's direct sale of gold to Big 4 and SJC Company is to increase the supply of gold to the market. Meanwhile, other credit institutions and businesses licensed to trade gold bars in the market (22 credit institutions and 16 gold businesses) still buy gold normally.

Regarding the fact that Big 4 only sell gold in Hanoi and Ho Chi Minh City but not in the provinces, according to the Governor, the State Bank does not intervene in this issue, state-owned commercial banks decide on their own selling points based on market demand. However, the State Bank's survey also shows that people's demand for gold is mainly concentrated in Hanoi and Ho Chi Minh City, and gold demand in the provinces is very low.

National Assembly delegate of Dong Thap province Pham Van Hoa asks questions. (Photo: Pham Kien/VNA)

Regarding the phenomenon of some gold shops temporarily stopping buying gold at certain times, the Governor said that this may be related to the cash flow balance and risk management of gold businesses. The State Bank always recommends that gold is a complex and unpredictable commodity, investors must be cautious with risks.

Also related to gold, delegate Tran Thi Thanh Huong (National Assembly Delegation of An Giang province) stated that in the past, many ministries and branches participated in management and coordination was not good, so the effectiveness of gold market management was not high.

Regarding this issue, the Governor said that each market and sector has a unified management agency and participating ministries. In managing the gold market, ministries and sectors need to increase coordination. The State Bank has received coordination from the Ministry of Public Security, especially in the process of intervening in the gold market to support and monitor the implementation process to avoid profiteering and fraud.

The State Bank also coordinated with the Ministry of Industry and Trade and the Ministry of Science and Technology to inspect businesses buying and selling gold bars and jewelry to summarize and overcome current limitations and difficulties.

Gold trading floor to be set up 'at the right time'

Also related to gold market management, delegate Do Huy Khanh (National Assembly Delegation of Dong Nai province) asked the State Bank to clarify its viewpoint on whether or not to establish a gold trading floor.

The Governor said he would set up a gold trading floor at the right time. (Photo: Vietnam+)

Regarding this issue, the Governor said that some countries have established gold exchanges such as China established a gold exchange in Shanghai, however, not many countries in the region have established gold exchanges. Establishing a gold exchange has the positive aspect of transparent transactions, the buying and selling needs of people, businesses, and entities will be more convenient.

However, according to Ms. Hong, to establish a gold exchange requires investment in infrastructure. Vietnam is not a gold producer, so when gold is traded between entities in the market, it must be imported from the international gold market.

According to the Governor, to establish a gold trading floor, the State Bank will work with ministries and branches to carefully research and assess the impact to advise and propose to the Government at the appropriate time and in accordance with the context of Vietnam./.

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