Vietnam: Economy awash in money
September, 12/2016 - 10:02
The National Financial Supervisory Committee has said that in the year-to-date the financial system has ensured that money supply is adequate thanks to the banking sector’s plentiful liquidity.
The total amount of broad money was VNĐ7,489,000 billion (US$332.844 billion), a 12.5 per cent increase from the end of 2015.
Money accounted for 74.9 per cent, up 9.1 per cent, with the remaining 25.1 per cent made of stocks and bonds, up 24.3 per cent.
M2 is a measure of the money supply that includes all elements of M1 as well as "near money." M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds and other time deposits.
What has caused this plentiful money supply?
This year bank lending has grown at 9.2 per cent, or similar to the rate in the same period last year. There are no signs it will rise in the rest of the year.
Deposits rose 9.94 per cent.
Liquidity in the interbank market has also been plentiful as indicated by the fact that the inter-bank interest rates have been cut by 0.3-0.5 percentage points to the lowest levels ever recorded.
Besides, the central bank has bought more than US$10 billion worth of foreign exchange in the market, increasing the country’s reserves to nearly $40 billion.
The plentiful liquidity has enabled the Treasury to issue government bonds and banks to issue enterprise bonds.
The Treasury successfully organised five government bond issuances worth VNĐ32.41 trillion (over $144.044 million).
BIDV issued VNĐ2.7 trillion worth enterprise bonds with a 10- year tenor and a coupon rate of 7.5 per cent fixed for the first five years.
Vietcombank plans to issue enterprise bonds worth VNĐ8 trillion, while the Khang Điền Housing Trading and Investment Company expects to issue enterprise bonds worth VNĐ 570 billion.
SBV deputy governor Nguyễn Thị Hồng said creating liquidity to support the Government’s issuance of bonds was an important task for agencies in charge of regulating monetary policies.
"Creating plentiful liquidity is also aimed at helping reduce lending interest rates," she said.
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Monday, September 12, 2016
Vietnam: Economy awash in money
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