Banks Allowed to Finance Transactions with Bonds
The State Bank of Vietnam, or the central bank, in an effort to raise bond liquidity has allowed commercial banks to use bonds to finance transactions.
These bonds include Government bonds issued by the Development Assistance Fund and municipal bonds issued by Hanoi and Ho Chi Minh City authorities.
Accordingly, commercial banks from February can use the bonds to lend on the collateral of commercial paper, to discount commercial paper, and to cover overdraft and overnight loans using the inter-bank electronic payment system.
However, these bonds would be placed in custody of the State Bank and the credit institutions must be responsible for repaying the bonds in cases of defaults.
VNS
Vietnamese
