Five key directions of the National Bank’s monetary policy operations in 2024

According to Donghai

Investing.com – On the morning of January 8, the State Bank of Vietnam (SBV) held a meeting to deploy the banking industry tasks for 2024. Vietnamese Prime Minister Pham Minh Zheng attended and chaired the meeting.

In her speech at the opening ceremony of the meeting, Nguyen Thi Hong, Governor of the State Bank of Vietnam, said that 2023 will still be a year full of difficulties and challenges for the government’s macroeconomic and monetary policy management.

From a domestic perspective, although the real estate and corporate bond markets have improved under the government’s vigorous regulation, there are still many difficulties and obstacles, which still put pressure on the funding needs of the banking system. The subsequent impact of the large-scale withdrawal incident at Standard Chartered Bank at the end of 2022 has greatly affected liquidity and market psychology, making credit institutions more cautious in managing and balancing credit capital.

The governor said that all the above factors have brought great challenges to the government’s management, especially Vietnam is a highly open economy. For many years, economic growth has relied on exports, exports and attracting foreign direct investment, and the economy’s investment capital Mainly depends on bank credit.

Regarding the banking industry, the governor said that from the beginning of the year to the whole year of 2023, the State Bank responded to the situation firmly, actively and flexibly, led and comprehensively guided all aspects of operational and financial work, and made basic contributions to the development of the banking industry. The overall achievements of the country’s economic and social development.

Judging from the results of monetary policy management during the year, this helped control inflation at 3.25% (lower than the 4.5% target set by Congress), supported economic growth to reach a level of 5.05%, stabilized the exchange rate, and the Vietnamese dong (HM 🙂 The depreciation was less than 3%, and the national foreign exchange reserves increased again…

By the end of 2023, industry-wide credit growth will be approximately 13.5%, significantly lower than the 14.18% in 2022.

In addition, the “2021-2025 Bad Debt Processing Related Credit Institution System Reorganization” project is also actively implemented. Although the valuation of the forced transfer bank is unprecedented, it has been basically completed, laying the foundation for the completion of a detailed transfer plan in the near future.

5 directions for monetary policy operations in 2024

In 2024, the global economic outlook and international markets will remain complex. Domestically, the economy is expected to still face many difficulties and challenges. Against this background, the National Bank stated that it will focus on 5 key directions and solutions:

First, we need to pay close attention to the development of domestic and international economic situations, proactively and flexibly use monetary policy tools simultaneously, and coordinate closely with economic policies and other macroeconomic factors to support economic growth and control inflation, which will help stabilize macroeconomics and monetary policy. Markets, foreign exchange and banking systems. Manage interest rates based on market development, macroeconomics, inflation and monetary policy goals; encourage credit institutions to reduce costs, simplify credit procedures, increase technology application and digital transformation in the credit process, and strive to lower loan interest rates to support the economy. Flexible exchange rate management is conducive to stabilizing the foreign exchange market and is conducive to macroeconomic stability.

Second, credit management should be proactive and flexible, adapt to macroeconomic development and inflation, and meet the economy’s capital needs. Credit growth is positioned at around 15% in 2024, which will be adjusted appropriately based on situation development and actual conditions. Continue to guide credit institutions to allocate credit to production and operation areas, priority areas and growth drivers (investment, consumption, exports) in accordance with government policies; strictly control credit in potential risk areas.

The third is to continue to decisively and effectively implement the 2021-2025 credit institution system restructuring project related to bad debt disposal; focus on the implementation of the disposal plan for weak credit institutions. Guide credit institutions to promote the processing and collection of bad debts; strive to keep the on-balance sheet bad debt rate (excluding weaker commercial banks) below 3% by 2024…

The fourth is to continue to promote the digital transformation of the banking industry and non-cash payment fields to meet the requirements of new business models, new products and services such as information technology, digital banking, and payment platforms. Enhance security for payment activities and digital transformation.

Finally, the National Bank will continue to improve the banking legal institutions and create a synchronized and convenient legal basis for monetary policy and bank operations. Continue to coordinate with parliamentary agencies to finalize the documentation for the Credit Institutions Law (Amendment) project and submit it to Parliament at the latest session. After the promulgation of the Credit Institutions Law (Revised), legal documents with detailed regulations will be formulated, submitted/published.

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