SBV demands more power

The proposal was put forward at a conference on re-structuring the central bank hosted by the State Bank of Vietnam and the International Monetary Fund in Hanoi.
The re-structuring process will cover four new issues comprising giving more power to high-level authorities and the responsibility of the bank in executing monetary policy, managing and supervising credit institutions in Vietnam, increasing the capability of staff, and re-structuring its organisations and affiliates as well as setting up a new management mechanism.
Pham Tien Dong, deputy director of the Organisation and Personnel Department, said the amendment to the State Bank Law will cover all articles of the law regarding the function, position, responsibility, independence and rights of the central bank [SBV] as well as its relation with the National Assembly, the government and other agencies. These issues were not discussed by the National Assembly before it passed the Law in 2003.
“SBV needs a comprehensive reform covering its organisational structures,” said Dong.
“The core amendment will focus on the function of the central bank to ensure the central bank’s top target is to stabilise price to support sustainable economic development,” said Dong.
The function of the SBV is to compile and execute monetary policies, stabilise the credit institutional system and ensure the payment systems run smoothly. However, the National Assembly, the government, ministries and local authorities interfere in SBV operations, reducing the efficiency of the SBV’s governance.
Banking experts have said the government should give more power to the governor to decide SBV’s organisational structure allowing the central bank to be a special agency not acting as a normal ministry. The central bank also needs to increase freedom in financial independence in hiring high-profile banking professionals.
The adjustment of the central bank structure will follow the new track, which includes establishment of a system of central bank branches in regions and in each province in order to reduce intervention of provincial authorities in its operations.
Of these, SBV branches in regions will have the functions of payment, supervision and inspecting, especially acting as a payment centre in the region and having a link with the national payment centre. Meanwhile, central bank branches in provinces will be organised along simple lines to provide funding, payments and manage and promote credit institutions.
SBV governance is still hindered by inefficient cooperation with other agencies such as credit allocations for industries, localities and large state-owned enterprises as well as mobilising and lending interest rates and foreign currencies management.



No. 755/April 3-9, 2006