Banking & Finance

State investment shrunk sharply this year due to an inability to disburse capital from government bonds. Most idle funds mobilized by the State were deposited in the banking system, with VND700 trillion ($30.31 billion) not being used effectively.

The USD/VND exchange rate has been quite high in recent days, with the State Bank of Vietnam (SBV) and market operators stopping commercial banks from receiving funds to conduct foreign exchange spot transactions. Despite the fact that no more money was injected into the system and that credit accelerated, liquidity in the banking system remained abundant. This is most evident in interest rates remaining flat at the lower end.

More than 220,000 individual securities accounts were opened in November - the ninth month in succession that new openings passed the 100,000 mark and the first month the number exceeded 200,000. Domestic investors opened more than 1.3 million new accounts in the first eleven months of the year.

The Party Central Committee’s Economic Commission touched on a range of measures at a recent meeting to support production, business, and economic growth in the time to come, including raising taxes on the rich to support the poor. The poor mainly buy domestic goods and rarely buy imports, so supporting them would stimulate consumption demand and boost production.

According to the Party Central Committee’s Economic Commission, while the heated development of the stock market is providing significant support to budget revenue, it is still necessary to consider increasing the transaction tax rate to limit speculation.

Aside from risks such as a sharp decline in deposits and a sharp increase in bad debts, together with greater competition from fintech companies, banks also face risks relating to real estate corporate bonds. The State Bank of Vietnam has therefore issued regulations restricting banks from pouring money into the corporate bond market.