Why does the State Bank only sell gold and not buy it?

On the morning of November 11, Governor of the State Bank of Vietnam Nguyen Thi Hong was the first member of the Government to answer questions at the 8th session of the 15th National Assembly.

Regarding the banking sector, the National Assembly focused on questioning: Monetary policy management to control inflation in the context of the volatile world economic situation; State management of the gold market and foreign exchange market; Loan support and interest rate exemption and reduction for people and businesses to restore production and business after the COVID-19 pandemic and natural disasters.

Delegate Luu Van Duc ( Dak Lak Delegation)

Questioning the Governor of the State Bank, delegate Luu Van Duc (Dak Lak delegation) said that on April 14, 2024, the Government Office issued Notice No. 160 on the Prime Minister's conclusion at the meeting to discuss solutions for managing the gold market in the coming time. In which, the State Bank and relevant ministries and agencies were assigned to urgently, seriously, fully, effectively and promptly implement tasks and solutions to stabilize and manage the market. Delegate Luu Van Duc asked the Governor of the Bank to tell how the above request has been implemented in the past and what impact it has had on gold prices and the gold market in the present and the future?

Questioning the Governor of the State Bank, delegate Pham Van Hoa (Dong Thap delegation) said that the recent sale of gold bars by the State Bank to stabilize gold prices has been very well supported by the people. However, the bank only sells but does not buy. If people want to sell gold due to the need to use cash, where can they sell it? If the bank does not buy, then neither will other stores. On the other hand, banks only sell gold in Hanoi and Ho Chi Minh City, why not sell it in other places in the country for people who want to buy it for convenience and ease?  

Delegate Pham Van Hoa (Dong Thap Delegation)

Responding to questions from delegates about stabilizing gold prices and the gold market, State Bank Governor Nguyen Thi Hong stated that the fluctuations in Vietnam's gold market are also common in other countries around the world. From 2014 to 2019, the Vietnamese gold market was relatively stable and people's demand for gold decreased. However, since 2021, world gold prices have increased, and accordingly, domestic gold prices have also increased.

However, from 2021 to June 2024, the State Bank has not intervened. From June 2024, the world gold price reached a peak, the gap between world and domestic gold prices increased. Therefore, the Government and the State Bank have directed strongly. Based on current laws, the State Bank has organized 9 auctions. However, in the context of gold prices reaching a peak and market expectations being very high, in order to quickly narrow the gap between domestic and international gold prices, the State Bank has switched to the option of selling gold directly through 4 State Commercial Banks and SJC Company. Therefore, the gap between domestic and international gold prices has decreased from about 15-18 million VND/tael to only about 3-4 million VND/tael.

Pointing out that gold prices continue to be complicated and unpredictable, State Bank Governor Nguyen Thi Hong said that our country does not produce gold, so intervention depends entirely on international gold imports. Therefore, the State Bank will closely monitor market developments to come up with appropriate policies to stabilize the gold market.

Responding to the question about the State Bank only selling and not buying, State Bank Governor Nguyen Thi Hong stated that from 2014 to now, the State Bank has not supplied gold bars to the market because the State Bank has a monopoly on the production of gold bars. With the context of increasing demand, the State Bank supplies gold and has not raised the issue of buying back. As for State Commercial Banks, when selling gold during this period, the State Bank mainly implemented solutions to increase gold supply.

Regarding the gold bar trading system, there are currently 22 credit institutions and 16 businesses trading in gold bars. The reason why businesses do not buy gold from individuals may be due to several reasons such as money balance.

State Bank Governor Nguyen Thi Hong answers questions

Regarding the reason why it is only sold in Hanoi and Ho Chi Minh City, Governor Nguyen Thi Hong said that the State Bank only grants licenses to businesses trading in gold bars and does not have mandatory regulations at any location.

“Enterprises and credit institutions themselves will review and evaluate the needs of provinces and cities and open locations to buy and sell gold bars. Through synthesizing the main buying and selling needs, in reality, the main demand is in Hanoi, Ho Chi Minh City and major cities, while in other provinces and cities, there is no phenomenon of people lining up to buy gold” – the Governor of the State Bank said.

Source: https://dangcongsan.vn/kinh-te/vi-sao-ngan-hang-nha-nuoc-chi-ban-ma-khong-mua-vang-682859.html