Despite good liquidity in the banking
system, the peculiarities in Việt Nam’s monetary policy management has
prevented the decline of interest rates on deposits. - Photo cafef.vn
HÀ NỘI – Despite good liquidity in the banking system, the
peculiarities in Việt Nam’s monetary policy management has prevented the
decline of interest rates on deposits, a central economic report said.
Central Committee’s Commission for Economic Affairs in its Việt Nam annual
report in February 2017, entitled: ’2017 – Overcoming difficulties and
continuing to develop’, said that it would be difficult to use inter-bank
rate to impact the market interest rate due to the peculiarities in Việt
Nam’s money and banking policy management.
the commission, there is a major difference in the monetary policy management
of Việt Nam compared with other countries. The committee explained that in
Thailand, Indonesia and many other countries, the monetary policy management
is implemented in accordance with the inflation target. However, the monetary
policy management in Việt Nam is for multi-purposes, including inflation
control, foreign exchange stability and capital control.
these purposes, when there is pressure on foreign exchange rates, the
It has cited
last year’s experience in the report. When the exchange rate increased
sharply in the wake of US’s Fed interest rate rise, the central bank had to
sell the US dollar and increase the interest rate of treasury bills to reduce
the pressure on the foreign exchange rates. It caused a sharp rise in
according to the commission, maintaining low interest rates in the inter-bank
market triggers instability, and it will be a barrier to the commercial banks
unwilling to lower interest rates (mainly long-term rates).
this, excess liquidity in some banks does not easily flow into other banks
that are short on liquidity and do not have good asset quality. According to
the committee, it is difficult for the latter to borrow from the first,
unless they have secured assets such as G-bonds.
the latter must increase interest rates to higher levels than the average
rates to be able to attract depositors.
the central bank has targeted keeping the interest rate stable, but some
commercial banks inched up deposit interest rates in the first month of the
central bank said the rise was only in some small-sized banks and did not reflect
the common trend of the entire banking system. It affirmed that interest
rates were stable in the first month of 2017 and would remain steady for the
Currently, deposit interest rates average at 0.8 per
cent to 1 per cent per year for below one-month terms, 4.5 per cent to 5.4
per cent per year for one-month term to six-month terms, 5.4 per cent to 6.5
per cent per year for six-month terms to 12-month terms and 6.4 per cent to
7.2 per cent per year for terms exceeding 12 months. - VNS