The challenge for the new Governor: He must return gold to the market!

The issue of returning gold to the market must be considered, but it's also necessary to address the vested interests that have taken over the gold bullion monopoly. This is a major challenge for the new Governor, Le Minh Hung, as he takes over the "hot seat" of governance.

Dr. Nguyen Duc Thanh – Director of the Vietnam Institute for Research and Policy (VERP) – affirmed this in an interview regarding the challenges in managing the gold market with the new Governor Le Minh Hung.

Mr. Thanh argued that the recent term of former Governor Nguyen Van Binh was successful in separating gold from circulation. At that time, when the gold market was "turbulent," the solutions implemented by the monetary authority to "rein in" gold prices and address the emergency situation were reasonable.

Return the gold to the market.

Now that gold has been removed from circulation, are there any remaining challenges from gold that the new Governor cannot ignore, sir?

Dr. Nguyen Duc Thanh: I still maintain the view that separating gold from circulation is a completely correct policy of the State Bank of Vietnam (SBV). This is something no previous Governor has been able to do. In the context of a volatile economy and significant macroeconomic instability, the SBV had to resort to strong measures, especially bringing the gold bullion market under very strict control. But now is the time for the new Governor to consider how to handle this issue, meaning gradually returning gold to the market.

Removing gold from circulation is one thing, but returning it to the market means forming a proper gold market. Similarly, with foreign exchange, the development of a foreign exchange market is crucial when considering removing the US dollar from circulation.

Therefore, I think the next step for the State Bank of Vietnam is to build a more liberal gold trading market, rather than maintaining the current situation.

Therefore, this is a major challenge and a heavy burden for the new Governor, Le Minh Hung, as he takes on the "hot seat" of leadership. Moreover, this is not simply the responsibility of the new Governor personally, but of the entire State Bank of Vietnam; it is a task set for this term.

To quell the previous "chaos" in the gold market, the State Bank of Vietnam proposed a solution to reduce the number of gold bars and maintain only one national gold bar brand, SJC. But as you said, we need to build a market for gold, meaning we need more "commodities" to trade?

Absolutely. It's true that when dealing with the situation, the State Bank of Vietnam (SBV) had to narrow down the issue to a single national gold bar brand. However, considering the "market" aspect, this wasn't appropriate. Therefore, in the current market context, the SBV needs to consider returning gold to the market and no longer intervening with the State.

Gold is also a commodity, a type of asset, so it must be returned to society and the market. And for the market to function normally, there are many types of goods and many brands. Returning gold to the market is not difficult; the difficulty lies elsewhere.

What specific difficulty are you referring to?

Dr. Nguyen Duc Thanh: That's because once a policy is introduced, there will always be interest groups that benefit from it, and groups that don't. This is true for all policies. Therefore, when a policy is changed, there will be groups whose interests are affected, and they will try to prevent the change from happening. If there were no groups to obstruct it, changing the policy would be very easy.

At the same time, if new policies are introduced, new problems and new interests will arise. Will the State Bank of Vietnam be able to control these groups and prevent them from manipulating the gold market as they did before?

The challenge lies in identifying these obstacles, determining the timing and methods of policy changes, and anticipating potential consequences. Furthermore, the question is whether the State Bank of Vietnam can overcome the resistance from relevant interest groups to further improve the gold market. In principle, the State Bank of Vietnam should and can do this; the only question is how proactive and appropriate it will be to meet practical requirements.

Returning gold to the market, across various gold brands, is normal practice; this current situation cannot be allowed to continue indefinitely.

If we avoid acting when society demands it, we will essentially turn victory into defeat. I believe this situation cannot last forever, but if it persists, it will cause unnecessary disruption and tension in society.

The new leadership of the State Bank of Vietnam, under the direction of the new Governor, has successfully handled this matter, preserving the achievements of separating gold from circulation while returning gold to the market as a normal asset. This represents a wonderful step forward in building upon past successes.

Speculation in gold has decreased, but a glimmer of hope remains.

Since the State Bank of Vietnam hasn't made any new regulations for a long time, it seems the State Bank is feeling confident about gold?

Currently, the world is not interested in gold because there is no longer a need for it as a safe haven, and people domestically are no longer as enthusiastic about gold as before. This is a very opportune time to reform gold policy, as there is ample room for improvement.

Many believe that since the gold market has been regulated by Decree 24 on gold market management, speculation has been eliminated. Based on your observations of the market, do you agree with this view?

I think there are many reasons to assess whether gold speculation still exists. Gold brands are concentrated in one place, holding gold has become risky because we don't know how policies will change, etc., making gold less attractive as an investment channel. Speculation has decreased, but not completely disappeared. Underground transactions still exist because as long as gold products without brands still have value in trading, exchange, and as a store of value, there will still be people interested in this area. It's very difficult to definitively say that gold speculation has completely disappeared.

Speculation surrounding nationally branded gold bars may no longer be apparent, but markets related to alternative assets will continue to exist and evolve. Therefore, I believe we should return the market to its normal state.

The period leading up to resolving the turmoil in the gold market bears the mark of the new Governor, who also served as Deputy Governor of the State Bank of Vietnam in charge of this area. What are your expectations for the new Governor to thoroughly address the existing problems facing the gold market?

I expected that too.

Thank you, sir!

According to Infonet