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State Bank eyes plan to buy up gold from public

Update: February, 01/2012 - 09:43

HCM CITY — The State Bank of Viet Nam will submit to the Government a proposal to mobilise gold from citizens, in an aim to serve socio-economic development, Governor Nguyen Van Binh has told Vietnam News Agency in an interview.

The SBV has asked the Government to issue a decree to replace Decree 174 on gold production and trading management, including gold bars.

The SBV proposal is based on the draft decree as well as the recently issued Government Decree 95, which governs administrative penalties in currency and gold trading.

Binh said gold-market management must guarantee the benefits of gold depositors as well as ensure sufficient capital sources for socio-economic development.

"We believe that with these tools, we, on the one hand, can prevent gold speculation in the economy, stabilise gold market and adjust domestic gold prices in accordance with the world price," he said. "On the other hand, we can mobilise gold from citizens to help socio-economic development."

According to SBV's assessment, the amount of gold currently held by the public in the country is about 300-500 tonnes, valued at US$16.59-27.65 billion.

"If we can't mobilise this source of gold, the country can't grow strongly," he said.

Credit institutions have been receiving and lending gold, but the strong fluctuation of gold price in past years, especially in 2010 and 2011, has caused high risks to credit institutions that have been doing so. This activity has been ineffective.

Under the proposed gold mobilisation scheme, the State will mobilise gold via credit institutions, which will act as agents of SBV.

In this way, the State does not directly intervene the market.

Through various tools, such as gold trading on the world market, the State will insure risks related to global gold-price volatility, thus guaranteeing the assets of citizens.

The mobilised gold can be used to exchange foreign currencies, which would help socio-economic development. — VNS

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