Draft law insures currency debate

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General director of a Hanoi-based big joint stock bank said scores of bank clients wanted to know about the draft law.

“If gold and foreign currencies were not insured, bank could hardly attract these valued capital flows,” said the executive.
Techcombank Haiphong director Nguyen Thi Thu Hang was worried the regulation would create a dent in bank deposits.

A large volume of gold and foreign currencies was kept at Techcombank diverse bank safes and it accounted for around 30 per cent at some branches, said Hang.

Banks’ concerns are shared by National Assembly deputies. Ho Chi Minh City deputy Tran Hoang Ngan assumed the best anti-dolarisation remedy was not putting a ban on foreign currency insurance but to raise depositors’ confidence in the dong currency and shift into dong deposits.

Depositors have placed over $10 billion worth foreign currency deposits in the banking system. If the proposed draft law makes them anxious and take back the money, this could unnecessary drive up tension in the banking system, according to Ngan.

According to Finance and Budget Committee chairman Phung Quoc Hien, gold and currencies being insured would be an effective measure to fight dollarisation.

Besides, deputies recommended setting gold and foreign currency deposits’ premium levels lower than that of dong deposits and premium payment to be made in dong currency to ensure payment ability.

Ho Chi Minh City deputy Tran Du Lich said depositing gold and foreign currency at banks could be considered a business which was risk-prone, therefore it should not be insured.

VietinBank chairman Pham Huy Hung said people’s appetite for gold and currencies hoarding could grow once their gold and currencies deposits at banks were insured.

Deputies also voiced the need to raise maximal benefit payment to a depositor from current VND50 million ($2,400) to around VND150-200 million ($7,000-$9,000).

“It is unfair when banks use people’s deposits for trading with rosy profit figures, whereas depositors receive a maximum payment of $2,400 only in case of risk,” said Ho Chi Minh City deputy Truong Thi Anh.