State Bank makes bold gold move

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>> SBV unveils draft decree on gold trading management

According to State Bank (SBV) governor Nguyen Van Binh, popular SJC gold brand will be central bank’s gold brand under its direct management and the brand will later be converted into SBV.

“The conversion could ensure state monopoly in gold bar production and management while taking advantages of enterprise asset and saving production costs,” said Binh, adding that the SBV had worked with Ho Chi Minh City People’s Committee, the body managing the Saigon Jewelry Company Limited (SJC) - the producer of SJC gold bars- before coming to the decision.

The idea of exercising state monopoly on gold bars was heartily backed by financial and banking experts.

“The state must have a monopoly in gold bar production and management as it is commonplace worldwide. Current gold bar production practice by private firms has paved the way for goldisation and making the state difficult to control gold prices,” said Cao Bang National Assembly deputy La Ngoc Thoang.

Thoang assumed gold price manipulations derived from too many private firms engaged in gold bar production.
However, Binh said bar production firms must make sacrifices in the national interest.

ACB Gold Centre director Tran Trong Quoc Khanh said keeping the gold bar market under check was important for macroeconomic stability.

Besides, industry experts assumed gold speculations would plunge when the new draft decree on bullion market management became effective from December 1, 2011.

There are 12,000 gold traders and eight manufacturers across the country currently which will reduce when controls become stricter.
Alongside streamlining gold trading business, central bank is reportedly drafting a plan to raise idle gold from the community into the banking system to service economic development.