Vietnam's Central Bank Looks to "Mobilize" Citizens' Gold Bullion

VIETNAM'S central bank plans to "mobilize" Gold Bullion held by Vietnamese citizens "in service of the national socio-economic development", State Bank of Vietnam governor Nguyen Van Binh said this week.

The SBV plans to replace Decree 174, currently governing organizations and individuals engaging in Gold Trading activities, which was issued in December 1999.

Van Binh estimates the volume of Gold Bullion held by the public to be between 300 and 500 tonnes.

"If we are unable to mobilize this capital flow for the socio-economic development, the country cannot become stronger," he told state broadcaster VTV.

"The SBV will submit the plan to the government to mobilize gold from the public in service of the socio-economic development," Van Binh continued.

Van Binh also predicted the move would act to reduce volatility in Vietnam's Gold Bullion market.

"We believe," he said, "that with this policy instrument, on the one hand, we will be able to prevent gold speculation in the economy, stabilize the gold market and regulate the domestic Gold Price in line with the world price, and on the other, to mobilize gold from the public in service of the national socio-economic development."

Last November, former SBV governor Cao Sy Kiem said the central bank should issue gold certificates as a way of mobilizing the country's private Gold Bullion hoard. 

Also that month, Van Binh announced that the SBV had "administratively acquired" the Saigon Jewelry Co., reportedly the only Gold Bullion refiner that had been allocated an import quota by the central bank after a change of rules.

In this week's interview, Van Binh said the state is aware of the public's desire to hold and trade Gold Bullion, as evidenced by private gold-lending operations that existed until May last year.

"Our government acknowledge the people's right to ownership, possession and trading of gold," he said.

"In fact, credit institutions mobilized and lent gold in the past. But over the past years, especially in 2010 and 2011, due to the significant fluctuation of Gold Price, credit institutions have faced numerous risks in mobilizing and lending gold. As a result, this business has failed to bear fruit."

As BullionVault reported at the time, one reason such business came to an end was official intervention by the SBV to end the practice.

Van Binh this week argued that the latest proposals would achieve the mobilization of Gold Bullion while also protecting the public that owns it:

"The state will mobilize gold via credit institutions [which] will act as agents for the SBV in mobilizing gold. Under this plan, the state will not intervene directly in the market, but mobilize gold via the intermediaries...with various instruments such as gold trading in international market for instance, the state will be able to insure the risks resulting from world price fluctuation. This will help to protect the asset value of the public while exchanging gold into foreign currencies in service of the socio-economic development."

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