HA NOI (VNS)— Gold owners were ordered by State Bank Governor Nguyen Van Binh earlier this year to sell their gold holdings, but little progress seems to have been made towards the goal.
Economist Pham Do Chi questioned the ability of the central bank to mobilise gold from private holdings at a time when gold prices have been rising.
Banking Academy lecturer Nguyen Trong Tai said that the pulling gold from circulation was necessary for economic development but that commercial banks represented a weak link. Many lack experience in managing gold trading, and they have now been ordered to stop lending in gold by November 25.
However, banks have long loaned gold for borrowers making real estate investments, as interest rates for long-term loans in gold were much lower than those for borrowing in dong.
With gold now available for lending only short-term, many banks have recently bought up more gold, and pushing up prices. "The central bank needs to increase gold reserves to actively intervene in the market," said former State Bank governor Cao Si Khiem.
With gold in short suplly, Sai Gon Jewelry Co (SJC) has proposed using jewelry as material to produce gold bullion.
"It would boost supplies, helping reduce the gap between domestic and world gold prices," said SJC director Nguyen Ngoc Que Chi.
But Viet Nam Gold Investment and Trading Co director Tran Thanh Hai worried that producing gold bullion from jewelry would facilitate smuggling.
Nguyen Hoang Minh, deputy director of HCM City branch of the State Bank, is urging the central bank to promptly issue a scheme for mobilising gold.
"If the central bank cannot issue one soon, it should publish a draft document to give guidance to the market," Minh said. — VNS