Mobilizing gold from the people: "Calculating crabs while they are in trouble"

The State Bank will submit to the Government a project to mobilize gold from the people to serve socio-economic development in the middle of the second quarter of 2012. This is considered a multi-objective project: aiming to both manage the gold market and unleash resources from the people.

What people care about most is whether the value of their assets is guaranteed when there are fluctuations in prices.

According to the State Bank's assessment, the amount of gold in the hands of the people is relatively large, about 300 - 500 tons. Let's do a calculation: Vietnam's foreign debt is currently about 44 billion USD. If the State Bank can mobilize 300-500 tons of gold (equivalent to 18-30 billion USD), the national foreign currency will be significantly balanced against foreign debt and improve the competitiveness of the economy.
Embarrassed

It sounds reasonable but that is just “thinking in the dark” because in reality, the management of the gold market in recent times has revealed shortcomings and it is difficult to change the habit of “holding” gold among the people. It is not too much to say that the Vietnamese gold market in 2011 suffered more policy fluctuations than price fluctuations (because fluctuations in gold prices are common fluctuations in the whole world). Many people compare the current management of the gold market to a person holding a frog, holding it tightly is afraid it cannot breathe, but letting it go makes it jump away. We have introduced many policies to manage the gold market but it seems that each policy that is introduced to solve one problem creates another problem.

It is not until now that the State Bank has considered mobilizing gold from the people because in fact, credit institutions have previously mobilized gold and lent gold. However, in 2010 and 2011, due to the large fluctuations in gold prices, mobilizing and lending gold by credit institutions faced many risks, so gold mobilization was temporarily stopped.

In the gold mobilization project, in the coming time, the State will mobilize gold through credit institutions, or in other words, credit institutions will act as agents for the State Bank in mobilizing gold. With this form, the State does not directly intervene in the market but through intermediary organizations, in this case, credit institutions.

Simple math problem

Returning to the story of unlocking gold resources among the people, it is not just now that it has been mentioned. What people care about most is whether the value of their assets is guaranteed when there are fluctuations in prices, but previously there were no derivative instruments to ensure this. Regarding this issue, in the spirit of the project to mobilize gold among the people, the State Bank commits to preserving the value of people's assets, the State will insure against risks when there are fluctuations in world gold prices.

When people deposit gold, the bank will issue a gold certificate to certify the amount of gold deposited (similar to when saving domestic or foreign currency at commercial banks), this certificate can be used for mortgage, trading and exchange on the market. When people need gold, they bring the certificate to the bank and can get it back at any time.

In terms of management, the State Bank will have a mechanism to mobilize capital for physical gold trading, while expanding gold trading on accounts. In parallel with mobilizing gold to serve the economy, the State must have derivative instruments to limit risks. Gold mobilization must pay interest to the people and must establish a secondary market to trade valuable gold certificates.

Many experts believe that the only way to completely resolve the gap between domestic gold prices and converted international gold prices is to allow domestic gold account trading and foreign gold account trading according to international practices. This is also consistent with the policy of changing the long-standing custom in our country that people like to buy and sell physical gold. Meanwhile, according to the spirit of the draft: People deposit gold into a savings account at a bank, which naturally forms a gold account for the people.

Therefore, if banks open gold accounts abroad, they can provide gold trading services directly to people, and the demand for physical gold trading will certainly decrease significantly. Of course, this activity needs to be strictly managed and implemented through the commercial banking system. The international gold price is used as a reference price, along with the USD/VND exchange rate, which will create the gold price listed in VND. In addition, there are specific regulations on the fluctuation range between the buying price and the selling price to avoid the difference between the buying price and the selling price of 3-4 million VND/tael as in the recent past.

According to Mr. Tran Quoc Quynh, senior expert of the Vietnam Gold Business Association: Mobilizing gold from the people is a correct policy, but how to mobilize it effectively is not simply an economic problem but also a matter of changing inherent habits and changing people's psychology. And to create trust for the people, the most important thing is policy stability. Avoid the situation of opening today and banning tomorrow like in the recent past. The simplest problem is to let gold move and adjust according to market rules and international practices.

According to dddn.com.vn