Iron discipline helps banking system escape ‘life-and-death’ moment
With new policies and ‘iron discipline’, the State Bank and Governor Nguyen Van Binh has led the banking system to sustainable growth.
During his working visit to the State Bank of Vietnam in late February 2016, Jim Yong Kim, the World Bank’s President, praised Binh’s role in monetary policy management.
The fact that Binh has been appointed as the Member of the Communist Party’s Politburo shows the recognition of the achievements the banking sector has gained under his leadership.
Kim congratulated the Governor for his excellent management over the Vietnam’s central bank which has created reasonable policies to curb inflation, which is useful to the reforms in the banking sector.
Victoria Kwakwa, the World Bank’s Vietnam Country Director, emphasized that the demand capital has been satisfied, while credit growth and reduced interest rates have helped small and medium sized enterprises develop.
In 2015, the monetary and exchange rate policies were the two important factors contributing to Vietnam’s important steps towards the implementation of macroeconomic policies. She said the the monetary and exchange rate policies were ‘positive’.
The macroeconomic stability, the key task, has been attained. The inflation rate has been curbed and the monetary policy has become more flexible, which can better support economic growth, with no pressure on inflation.
Reuters in January highlighted the fact that Governor Nguyen Van Binh has become a member of the Politburo, commenting that the appearance of a technocrat face in the leadership shows a sign of stronger economic reform.
Binh is described as deserving credit for averting the collapse of the banking system when bad debts became serious and tens of thousands of businesses had to leave the market.
Vietnam, which is carrying out the economic reform, needs such technocrats like Binh – highly professional trained, reliable and capable.
Reuters commented that the Vietnamese dong is now one of the most stable currencies in South Asia, losing 4.9 percent in 2015 compared to double digits elsewhere.
Nirukt Sapru, CEO of Standard Chartered Bank, also has a positive outlook about the way the government of Vietnam and the State Bank managed the economy and the banking sector to escape from an uncertain period to a new sustainable development period.
He emphasized the State Bank’s efforts in curbing inflation, stabilizing the exchange rate and settling problems in the banking system.
Natasha Ansell, CEO of CitiBank Vietnam, while noting that Vietnam has succeeded in attracting an average of $10 billion worth of capital from international investors every year in recent years, commented that the State Bank’s management of interest rates and exchange rate contributed to the success.