SBV’s Governor: Money is Coming to Banks Abundantly
Stoxplus | Latest Update: Friday, 28 February 2014 14:35:00
For the first time in 10 years, the liquidity of the banking system is very abundant in the first two months of the year, said SBV’s Governor Nguyen Van Binh at a government meeting this morning (February 28, 2014), local newswire VnEconomy reported.
According to the State Bank of Vietnam (SBV)''s Governor, during the last Tet (Lunar New Year), the SBV didn’t have to worry about refinancing commercial banks. With ample liquidity, about VND150 trillion cash was injected during Tet, but the withdrawn amount was also big.
However, due to characteristics business and production in the first two months of the year, credit has dropped approximately 1.6%. Government and relevant ministries need to boost government bond issuance in the first quarter.
The Governor also said that, after Tet, monetary regulating works are very stressful. As so much money comes to the system, banks usually do currency trading, forcing the SBV to withdraw money.
In addition, deposits of the State Treasury in the banking system is also very high, up to VND57 trillion of idle money. Therefore, disbursement must be accelerated; otherwise it is a vicious circle because it will return to the banking system.
Regarding foreging exchange rates, the Governor said they are still regulated stably. In the first two months of the year, the SBV has purchased over USD4 billion, increasing foreign reserves.
Regarding interest rates, current interest rates remain stable and tend to decrease a little. The target this year is to reduce 1-2%. If the CPI is under control this year, the opportunity to reduce the interest rate is high, he said.
On the basis of stable and trending downward interest rates, the SBV proposes to spare an amount of money for rural – agricultural field. However, drawing experiences from previous years, the concept of the packages will not be used but programs to serve new production models, exports of agricultural products, etc.