When asked by a delegate about banks only selling gold, not buying it, what did Governor Nguyen Thi Hong say?

The current situation of soaring gold prices, complex developments, and banks only selling gold without buying it were the subject of numerous questions and lively debates by delegates during the questioning session with State Bank Governor Nguyen Thi Hong this morning.

How stable is the gold market?

On the morning of November 11th, the National Assembly held a question-and-answer session on the first group of issues related to the banking sector. National Assembly Chairman Tran Thanh Man presided over the session.

During the questioning session, delegate Luu Van Duc (from Dak Lak province) inquired about how the State Bank of Vietnam is implementing the government's directive to stabilize the gold market. He also asked how the central bank's management of the gold market impacts current and future gold prices and the market as a whole.

Đại biểu chất vấn — Representative Luu Van Duc (from Dak Lak province) questioned the Governor of the State Bank of Vietnam, Nguyen Thi Hong, on the morning of November 11th.

Responding to a German delegate, Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong stated that fluctuations in the Vietnamese gold market are also a common trend globally .

The State Bank of Vietnam has advised and submitted to the Government for promulgation Decree 24 and implemented solutions to ensure the supply and demand of gold in the market since 2013.

From 2014 to 2019, the gold market was relatively stable and consumer demand for gold decreased. However, starting in 2021, world gold prices rose sharply, causing domestic prices to increase as well. At this time, the State Bank of Vietnam did not intervene.

However, from June 2024, international gold prices reached a peak, and the price difference between domestic and international gold was high, prompting the Government to take very decisive action. The State Bank of Vietnam also based its actions on current laws and organized auctions. Nine auction sessions showed this to be a fairly effective solution in 2013.

"However, in the new context, with gold prices rising sharply and market expectations soaring, to narrow the price gap between domestic and international markets, the State Bank of Vietnam has switched to direct sales through four state-owned commercial banks and SJC Company. Thanks to this method, the price difference between domestic and international gold, which was previously 15-18 million VND/ounce, has now narrowed to only 3-4 million VND/ounce," Governor Nguyen Thi Hong said.

However, Ms. Hong added that the gold market is predicted to be unpredictable and complex, and since Vietnam does not produce gold, intervention depends on international imports.

"The State Bank of Vietnam will continue to closely monitor the situation and implement policies to stabilize the gold market," Ms. Hong said.

Why do banks only sell gold and not buy it?

During the questioning of the Governor of the State Bank of Vietnam, Representative Pham Van Hoa (from Dong Thap province) raised the issue that the recent sale of gold bars by the State Bank of Vietnam to stabilize gold prices has been widely supported by the people. However, the bank only sells and does not buy.

"If people want to sell gold to get cash, where can they sell it? If banks don't buy it, then neither will other shops. On the other hand, banks only sell gold in Hanoi and Ho Chi Minh City. Why not sell it in other places across the country for people who need to buy it, making it more convenient and easier?", Mr. Hoa questioned.

In response to questions, Governor of the State Bank of Vietnam, Nguyen Thi Hong, stated that since 2014, the State Bank of Vietnam has not supplied gold bars to the market.

Amid increasing demand, banks have increased gold supply but have not yet considered buying it back. For state-owned commercial banks, when selling gold, the State Bank of Vietnam has implemented measures to increase gold supply.

Currently, there are 22 credit institutions and 16 businesses involved in buying and selling gold bars. These banks and businesses conduct their gold trading as usual.

"The reason businesses might not buy gold from individuals could be for a specific reason, such as balancing their cash flow," the female governor explained.

Regarding the question of why gold bars are only sold in Hanoi and Ho Chi Minh City, Ms. Hong pointed out that the State Bank of Vietnam only licenses businesses to trade gold bars and does not mandate specific locations. Therefore, credit institutions independently assess the demand in various provinces and cities to open gold bar trading locations.

"Based on our assessment, we found that the demand for buying and selling gold is mainly concentrated in Hanoi and Ho Chi Minh City and other major cities. In other provinces and cities across the country, there is no phenomenon of people queuing to buy gold," Ms. Hong said.

Is it risky for people to sell gold on the "black market"?

Realizing that the State Bank Governor's questioning was unsatisfactory, National Assembly Deputy Pham Van Hoa continued the debate: "The State Bank sells gold bars but does not buy them back from the market, forcing people to sell gold on the 'black market'."

The representative suggested that the State Bank of Vietnam consider buying back gold bars from the public to facilitate their sale when needed.

In response, the Governor of the State Bank of Vietnam stated that, regarding gold purchases, credit institutions themselves comply with the State Bank's requirements to stabilize the gold market. When credit institutions purchase gold, they must invest in equipment and personnel to identify and verify the quality of the gold. The State Bank of Vietnam will consider proposing solutions to address this issue.

Currently, 22 credit institutions and 16 businesses are buying/selling gold in many places, so the reason they are not buying could be due to several factors. Especially given the high volatility of gold prices, businesses must carefully consider their buying/selling activities to mitigate risks.

For example, people buy gold at one price but sell it at a lower price, putting them at risk. Meanwhile, the State Bank of Vietnam has warned that gold prices are very volatile. Investing in this commodity carries risks and can easily lead to losses when buying and selling.

When will a gold exchange be established?

In his question to the Governor of the State Bank of Vietnam, delegate Do Huy Khanh (Dong Nai delegation) raised the issue that many developed countries in the world now allow the establishment of gold exchanges, attracting gold resources and creating many opportunities for domestic investors.

"Does the State Bank of Vietnam plan to propose to the Government the establishment of a gold exchange?", Representative Khanh asked.

Regarding this matter, Ms. Hong stated that some countries have established gold exchanges, such as China, which established a gold exchange in Shanghai, but some have not. Establishing a gold exchange has the positive aspect of transparent trading, making it easier for individuals, businesses, and other entities to buy and sell.

However, according to Ms. Hong, establishing a gold exchange requires investment in infrastructure. Vietnam is not a gold producer. Therefore, when gold is traded between entities in the market, it must be imported from the international gold market.

According to Ms. Hong, in order to establish a gold exchange, the State Bank of Vietnam will work with relevant ministries and agencies to thoroughly research and assess the impact in order to advise and propose to the Government at an appropriate time and in accordance with the Vietnamese context.

Private gold shops face difficulties proving the origin of their gold.

Representative Tran Huu Hau (Tay Ninh delegation) pointed out that when establishing a business, gold trading units are responsible for declaring their capital according to regulations. Decree 20 requires them to comply with regulations on accounting systems, preparation and use of documents.

However, in reality, most gold businesses today are private enterprises upgraded from shops, with simple registration procedures. Meanwhile, many types of gold, especially inherited assets, cannot prove their origin.

Representative Hau suggested that the Governor of the State Bank of Vietnam advise the Prime Minister to direct relevant ministries and agencies to coordinate in resolving these difficulties.

In response to the delegates, the Governor of the State Bank of Vietnam stated that Decree 24 clearly stipulates the responsibilities of ministries and agencies regarding the management of the gold market. Accounting and documentation fall under the responsibility of the Ministry of Finance.

"The State Bank of Vietnam acknowledges the issue and will discuss it with relevant ministries and agencies to find appropriate solutions," Ms. Hong said.

Because the question involved multiple ministries and agencies, National Assembly Chairman Tran Thanh Man requested the State Bank of Vietnam to respond to Representative Tran Huu Hau in writing.

Source: https://www.baogiaothong.vn/dai-bieu-chat-van-ngan-hang-chi-ban-vang-khong-mua-thong-doc-nguyen-thi-hong-noi-gi-192241111095019286.htm