Jewellery gold on display at a store of Bảo Tín Minh Châu. The Vietnam Gold Business Association recently proposed the Government permit jewellery firms to borrow gold from households at negotiated interest rates. — VNA/VNS Photo Trần Việt

HÀ NỘI — A proposal to allow businesses to borrow gold from the public has sparked debate over how to unlock large volumes of idle assets for production while preventing financial risks and safeguarding monetary stability.

The Vietnam Gold Business Association has recently proposed that the Government permit jewellery firms to borrow gold from households at negotiated interest rates, arguing that the lack of a legal framework has left significant quantities of gold sitting unused in private holdings.

Economist Nguyễn Trí Hiếu supported the proposal, estimating that around 400–500 tonnes of gold are currently held by the public.

“Unlocking this stock could reduce reliance on imports, lower production costs and support the domestic jewellery industry,” he said.

Underlying risks

However, Hiếu warned that gold lending carries substantial risks, including the possibility of renewed goldisation of the economy.

He said weak oversight could also lead to disguised mobilisation schemes that threaten macroeconomic stability.

To reduce these risks, Hiếu said the scheme should first be piloted with a limited number of financially strong and transparent enterprises under strict supervision by the State Bank of Vietnam (SBV).

He also suggested introducing gold certificates, derivatives such as futures contracts and bank guarantees to protect depositors.

Hiếu said the SBV should issue gold certificates specifying the quantity, type and brand of gold while taking responsibility for safekeeping. At maturity, depositors would receive back the gold they had placed with the central bank.

Việt Nam should also consider establishing a gold trading exchange to allow businesses to trade gold via accounts, he said, adding that firms could issue gold certificates if they meet the same standards as those issued by the SBV.

“These measures would enhance transparency in the gold market and channel idle gold held by the public into the economy,” Hiếu said.

According to Đinh Thế Hiển, director of the Research Institute of Informatics and Applied Economics, gold mobilisation and lending previously caused instability in the monetary market, prompting regulators to halt such schemes.

He noted that if businesses borrow gold from the public, they must repay both principal and interest in gold, while revenues are largely earned in Vietnamese đồng. This creates a significant currency and price mismatch, particularly amid volatile gold prices.

For example, a company borrowing 50 taels of gold to produce jewellery would sell its products for cash and later need to repurchase gold to repay the debt. If gold prices rise sharply, as seen in 2024–25, the proceeds may be insufficient to buy back the borrowed gold, leading to potential losses.

More seriously, if such situations occur across multiple firms, the already sensitive gold market could be destabilised, he said.

He added that past cases have shown gold traders failing to repay borrowed gold during price surges, resulting in disputes and weakening market confidence.

“A small spark could spread widely,” Hiển said, warning that the impact could extend beyond the gold market to the wider financial system and economy

The question of how

A man with the gold ring he has just bought. Việt Nam is considered one of the countries with large volumes of gold held by the public. — VNA/VNS Photo

Lending gold at interest rates should be treated as a form of credit activity rather than a simple civil transaction and should require strict standards for risk management, transparency, and market discipline, said Nguyễn Quang Huy of the Finance and Banking Faculty at Nguyễn Trãi University.

He raised concerns about what would happen if borrowing firms fall into financial distress, noting that individuals lending gold would not have protections equivalent to deposit insurance.

Huy called for stringent entry criteria for market participants, including financial capacity, compliance history and risk management capability, as well as limits on mobilisation relative to capital to avoid excessive leverage.

“Transparency would be the key,” he said, adding that participating firms must be required to regularly disclose mobilisation volumes, use of funds and associated risks, alongside mandatory independent audits.

Given the Government’s policy direction to limit goldisation, he urged caution in reopening a gold mobilisation mechanism, adding that the first phase should focus on small-scale pilot implementation under close supervision.

Lê Bá Chí Nhân, an expert, said Việt Nam is considered one of the countries with large volumes of gold held by the public but much of this resource has yet to enter production and business cycles or generate added value for the economy.

He said a mechanism allowing firms to borrow gold from households could ease working capital constraints, expand production and enhance the competitiveness of the jewellery sector, which has export potential.

However, he warned that without a well-designed regulatory framework, such policies could fuel speculation, create parallel gold markets and put pressure on exchange rates, undermining the role of the domestic currency.

“Without strict safeguards, gold lending could evolve into a shadow banking activity outside financial supervision,” Nhân said.

“Any implementation would require a clear regulatory framework, including limits on eligible borrowers, strict control over the use of borrowed gold for production purposes and mandatory registration, reporting and supervision.

“If properly designed, this could help channel idle gold into productive use rather than speculation. Otherwise, it could trigger a new cycle of goldisation.

“The key question is not whether to allow gold lending, but how to design a framework that both mobilises resources and ensures monetary stability.”

Lawyer Trương Thanh Đức, director of law firm ANVI, said a separate regulatory framework may not be necessary, noting that civil transactions involving gold are not prohibited under current law, except for its use as a means of payment.

He said allowing firms to borrow gold is not a sound solution to unlock idle resources, suggesting instead policies to encourage households to sell gold and channel funds into productive investments such as businesses, bonds, stocks, real estate or bank deposits.

“Encouraging people to convert gold into capital for investment would be a safer way to bring resources into the economy,” Đức said. — VNS