Industry insiders are digging gold from the community to serve economic development.
The State Bank of Vietnam (SBV) recently unveiled the draft plan on raising gold from the community would possibly go public in early February. Accordingly, credit institutions would function as SBV agents in raising idle gold.
A member of the National Monetary Policies Advisory Council and SBV’s former chief Dr. Cao Si Kiem assumed the best way to lure gold from the community which is estimated at around 300-500 tonnes currently would be issuing gold certificates, allowing the state to use this gold pool serving firms’ production and business needs. Besides, the state can use the gold to intervene in the market when necessary.
Advocating the idea, Vietnam Gold Business Association (VGBA) general secretary and deputy chairman Dinh Nho Bang suggested offer these gold certificates reasonably high interest rates to heighten their feasibility and form a secondary market to trade these certificates.
For their part, economists assumed to get people’s trust, the SBV should directly issue gold certificates, pay gold depositors interest rates and commercial banks transaction fees. Parallel to gold certificate distribution central bank should also introduce risk management criteria towards gold certificate issuance to avoid banks vying with each other in raising gold.
Senior financial expert Dr. Nguyen Tri Hieu forecast it might take at least three years for gold certificates to go mainstream.
Scores of industry insiders, however, assumed the plan on raising gold from the community would not be feasible unless central bank opened more gold trading channels, particularly giving the green light to account-based gold trading.
Bang said expanding account-based gold trading was inevitable to match world practices.
A Vietinbank gold trading company representative said that shutting gold trading floors was just a stopgap solution and spreading account-based gold trading would be the way the market should go.
“In the long haul, to attract gold from the community in an effective manner the government should give the nod to resuming gold trading floors operation and put them under SBV’s direct governance. This would help reduce speculations and be much more efficient than granting quotas for gold import whenever gold price fever takes place,” said SBV’s Foreign Exchange Management Department former deputy head Phi Dang Minh.
SBV chief Nguyen Van Binh confirmed alongside raising gold from the community, central bank would enact different tools to fix the bullion market.