3:07:23 PM | 22/9/2008
The State Bank of Vietnam, the country’s central bank, should assist local commercial banks by using necessary open market tools to cut lending rates to help local businesses particularly in real estate, processing production and exports, Le Xuan Nghia, a leading economist, head of the SBV’s Banking Development Strategy told the state-run Labor newspaper Sept 19.
“Vietnam should refer to lessons from China which has just lowered borrowing cost by 1 per cent, slashing compulsory reserve by 1 per cent, increasing loans for real estate developers and consumers to assure investors in the wake of the credit storm in the U.S.,” Mr Nghia emphasized.
“I personally think that the central bank should not lower base rates now,” Mr Nghia said.
A shift in the government policies should be made from prioritizing loans for production for exports to domestic market in a couple of years to come. At first, what Vietnam needs to do now is step by step cutting compulsory reserve among banks. Vietnam’s central bank needs to direct commercial banks to take flexible moves to protect the local real estate market, Mr Nghia added.
The central bank should also scrutinize and supervise operations of local banks with the focus on high liquidity and credit quality, Mr Nghia advised.
Supervision over credits is a complicated issue for many banks, and they should center on big debtors with appropriate policies, Mr Nghia highlighted.
The credit crisis in the U.S. becomes more serious than ever, affecting the globe including Vietnam, Mr Nghia said, predicting that prices of dollars will likely appreciate and gold prices will rebound, which will cause chaos among depositors.
In short, Vietnam will not be directly impacted as it has not invested in bonds and securities in U.S. financial institutions, however, it will have indirect impacts such as trade, financial investments will shrink, which be hurdles for Vietnam’s economic growth, Mr Nghia noted. (Labor)
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