At a conference on December 28 to deploy tasks of the banking sector in 2023, Nguyen Thi Hong, governor of the State Bank of Vietnam (SBV), said that the industry had experienced many difficulties due to complicated and unpredictable fluctuations in the global and domestic economy.

The global economy has witnessed rising inflation, rising oil and material prices, and tightened monetary policy of the Fed and many other central banks, which led to raising interest rates and pushing up the US dollar worldwide.

Production and business in Vietnam have entered a post-pandemic recovery period, but many challenges remain. The stock market, real estate, and corporate bonds have faced difficulties, and investor confidence has fallen, which has put great pressure on monetary policy.

The conference highlighted many issues. Firstly, how to manage credit policies to support economic growth in line with ensuring the banking system's safety. Some monetary indicators, such as credit-to-mobilised capital and credit-to-GDP ratios, are still at a concerning level.

Secondly, how to stabilise the foreign exchange market in the context of Vietnam’s economy. Domestic production depends significantly on imports, and the US dollar has appreciated strongly. Vietnam also faces the risk of being monitored strictly for currency manipulation by the US.

Thirdly, how to stabilise the money market and system liquidity amid declining market confidence amid the Saigon Bank (SCB) issue, which caused people to withdraw money from this bank ahead of the maturity dates.

Many leading bankers attended the conference

Hong emphasised that the banking sector had contributed significantly to strengthening the macroeconomic foundation, such as controlling inflation at a low level of 3.2 per cent on average and economic growth recovering at a high rate of about 8 per cent.

The money and foreign exchange markets are stable. As of December 27, the VND depreciated by about 3.8 per cent, and the interest rate increased by nearly 1 per cent ON year. These changes are lower than in other countries in the region and the world.

In November, the US Treasury Department removed Vietnam from the monitoring list for currency manipulation in its bi-annual report to congress on macroeconomic and foreign-exchange policies of major US. trading partners.

"The results in 2022 demonstrate that flexible responses based on closely following monitoring, with each tool and solution considering the appropriate time and intensity, has contributed to solving these difficult problems," Hong said.

At the conference, the experts and participants focused on discussing key issues such as managing monetary and credit policy in line with the goal of inflation control and macroeconomic stability, effectively implementing the government's Socio-Economic Recovery and Development Programme.