What is the definition of the money market? What are the operating interest rates adjusted by the State Bank of Vietnam on the money market during 2023?
What is the definition of the money market in Vietnam?
Under Clause 6, Article 6 of the State Bank Law 2010 as follows:
Interpretation of terms
In this Law. the terms below are construed as follows:
...
6. Money market means a place for short-term capital transactions.
7. Short-term transaction means an under-12 month transaction of valuable papers.
8. Valuable paper means a proof evidencing the debt-payment obligation of the issuer towards the owner in a certain duration under the interest payment condition and other conditions.
Thus, the money market means a place for issuing, trading, buying and selling short-term valuable papers to satisfy the needs of the social economy.
What are the interest rates adjusted by the State Bank of Vietnam on the money market during 2023?
Under Article 12 of the Law on the State Bank of Vietnam 2010, in case abnormal developments are seen in the money market, the State Bank shall provide a mechanism for regulating interest rates applicable to credit institutions in their relations with others and their clients and in other credit relations
Up to now, in 2023, to curb the rising momentum of inflation, the State Bank of Vietnam has tightened monetary policy by adjusting the SBV's operating interest rates in the money market. The SBV's adjustment has the effect of stabilizing the money market and curbing the rise of inflation.
Accordingly, the below table specifies the SBV's operating interest rates during 2023:
Time for applying in 2023 | Deposit interest rate | Refinancing interest rate | Rediscount interest rate | Overnight loan interest rates | Legal basis |
01/01/2023 | A loan term of less than 1 month: 1.0% / year. Loan term from 1 month to less than 6 months: 6.0%/year | 6.0%/year. | 4.5%/year | 7.0% per annum. | - Decision 1809/QD-NHNN in 2022 (applied from 25/10/2022 to 14/03/2023) - Decision 1812/QD-NHNN in 2022 (applied from 25/10/2022 to 03/04/2023) |
15/03/2023 | Loan term of less than 1 month: 1.0% / year. Loan term from 1 month to less than 6 months is 6.0%/year | 6%/year | 3.5%/year | 6.0%/year | - Decision 313/QD-NHNN in 2023 (applied from 15/03/2023 to 03/04/2023) |
03/4/2023 | Loan term of less than 1 month: 0.5%/year. Loan term from 1 month to less than 6 months is 5.5%/year | 5.5%/year. | 3.5% per year. | 6.0%/year. | - Decision 575/QD-NHNN in 2023 (applied from 03/04/2023 to 25/05/2023) - Decision 574/QD-NHNN in 2023 (applicable from 03/04/2023 to 25/05/2023) |
25/05/2023 | Loan term of less than 1 month: 0.5%/year. Loan term from 1 month to less than 6 months: 5.0%/year | 5.0%/year | 3.5% per year. | 5.5%/year. | - Decision 950/QD-NHNN in 2023 (applied from 25/05/2023 to 19/06/2023) - Decision 951/QD-NHNN in 2023 (applied from 25/05/2023 to 19/06/2023) |
19/06/2023 - present | Loan term of less than 1 month: 0.5%/year. Loan term from 1 month to less than 6 months: 4.75%/year | 4.5%/year | 3.0%/year. | 5.0%/year. | - Decision 1124/QD-NHNN in 2023 (applied from 19/6/2032 - present) - Decision 1123/QD-NHNN in 2023 (applied from 19/6/2032 - present) |
Which agency will organize, regulate, and develop the money market in Vietnam?
Under Clause 6, Article 4 of the State Bank Law 2010, the tasks and powers of the State Bank of Vietnam are stipulated as follows:
Tasks and powers of the State Bank of Vietnam
1. To conduct operations for the purpose of currency value stability; to assure the safety for banking operations and the system of credit institutions; to assure the safety and effectiveness of the national payment system; and to contribute to accelerating socio-economic development along the socialist orientation.
2. To participate in the elaboration of national socio-economic development strategies and plans.
3. To elaborate banking development strategies for submission to competent state agencies for approval, and organize the implementation of these strategies.
4. To promulgate or propose competent state agencies to promulgate legal documents on monetary and banking matters; to propagate, disseminate and examine legal documents on monetary and banking matters according to its competence.
5. To determine annual inflation rate targets for submission by the Government to the National Assembly for decision, and organize the realization thereof.
6. To organize, regulate and develop the money market.
7. To organize a monetary and banking statistics and forecast system; to publicize monetary and banking information according to law.
8. To organize the printing, minting, preservation and transportation of banknotes and coins: and to conduct operations of issuing, withdrawing, replacing and destroying banknotes and coins.
9. To grant, modify, supplement or revoke establishment and operation licenses of credit institutions, licenses for establishing branches of foreign banks, licenses for establishing representative offices of foreign credit institutions and other foreign organizations with banking operations; lo grant or revoke licenses for provision of intermediary payment services for non-bank institutions; to grant or revoke licenses for provision of credit information services to organizations: to approve the acquisition, sale, division, splitting, consolidation, merger and dissolution of credit institutions according to law.
10. To act as the representative of the state capital portions in enterprises performing its functions and tasks and in credit institutions with state capital according to law; to use its legal capital to contribute capital for establishing special enterprises to perform its functions and tasks under the Prime Minister's decision.
11. To examine, inspect and supervise banks: to handle violations of the monetary and banking laws.
12. To decide on the application of special handling measures to credit institutions which commit severe violations of the monetary and banking law-s or meet with financial difficulties, posing a threat to the safety of the banking system. These measures include purchasing shares from credit institutions; suspending or removing from post managers or executive officers of credit institutions; deciding on the merger, consolidation or dissolution of credit institutions; placing credit institutions under special control; and performing its tasks and powers as prescribed by the law on bankruptcy of credit institutions.
13. To assume the prime responsibility for. and coordinate with concerned agencies in. formulating and implementing anti-money laundering policies and plans.
14. To perform the state management of deposit insurance according to the law on deposit insurance.
15. To assume the prime responsibility for making, monitoring, forecasting and analyzing the international payment balance.
16. To organize, manage and supervise the national payment system and provide payment services for banks; to participate in organizing and supervising the operation of payment systems in the economy.
17. To perform the state management of foreign exchange, foreign exchange and gold trading activities.
18. To manage state foreign exchange reserves.
19. To manage the borrowing and repayment of foreign loans and the provision of loans to foreign parties and recovery of foreign debts according to law.
20. To assume the prime responsibility for. and coordinate with concerned agencies in, preparing for and conducting the negotiation for and conclusion of treaties with international financial or monetary institutions to which the Stale Bank acts as a representative and to act as the official representative of the borrower defined in treaties under the assignment or authorization of the President or the Government.
21. To undertake international cooperation in the monetary and banking sector.
22. To represent the State of the Socialist Republic of Vietnam at international monetary and banking institutions.
23. To organize a credit information system and provide credit information services: to perform the state management of credit information providers.
24. To act as an agent and provide banking services for the State Treasury.
25. To join the Ministry of Finance in issuing government bonds and government-guaranteed bonds.
26. To provide professional training in monetary and banking operations; to research and apply banking sciences and technologies.
27. To perform other tasks and exercise other powers provided by law.
Thus, the State Bank of Vietnam will organize, regulate and develop the money market.
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