Recently, under the strong direction of the Prime Minister, the State Bank has had a series of solutions to help narrow the gap between domestic and world gold prices. However, there are still many problems such as people having difficulty buying gold, the "black market" gold market becoming active, and the lack of complete control over gold smuggling... In your opinion, what additional solutions are needed to stabilize the gold market?
- From the contents of the Resolution, Telegram, and Directive of the Prime Minister on gold market management, to stabilize the gold market, it is necessary to first change the awareness and thinking of managing and operating the gold market according to market principles.
Changing thinking first of all requires thoroughly understanding the principles of gold market management in a market economy:
To limit gold and dollarization of the economy, we need to aim to develop a healthy market and limit speculation;
The State Bank only performs the function of management and policy making, only regulates foreign exchange reserves in gold according to the Foreign Exchange Ordinance, the State Bank Law, the Law on Credit Institutions, but does not participate in production and business or regulate the market by administrative measures, and does not directly interfere with the business activities of enterprises;
Enterprises that meet the conditions for production and business must be allowed to operate according to the market mechanism. The State only manages the quality (gold age), weight, and trademarks of registered enterprises, allowing many brands to exist instead of monopolizing. When business conditions are regulated, there must be no procedures for requesting, granting, or granting sub-licenses;
The Vietnamese gold market must be connected with the world gold market, and the current price gap must be eliminated by market solutions. Supply must be linked to demand, moving towards import-export liberalization, with the State only regulating by policy like other countries in the world;
It is necessary to gradually transform from the physical gold market to a gold market with many derivative products, creating more risk insurance tools for businesses and investors and integrating and accessing popular financial products in the international market;
Ensuring the legal ownership of gold of organizations and individuals such as the right to hold, transfer, mortgage, pledge... according to the provisions of law while restricting the use of gold as a means of payment. Gold market management must have appropriate solutions to mobilize the huge gold resources in the population (about 500 tons) to serve socio-economic development.
Could you please share more about the solutions to help the gold market become more transparent and stable?
- I think, first of all, we need to immediately implement solutions such as urgently amending Decree No. 24/2012/ND-CP to eliminate current shortcomings. This amended Decree must more comprehensively address financial products and services related to gold, not simply managing gold bars and gold jewelry.
Second, it is necessary to return the production and trading of gold bars to enterprises. Commercial banks should not play the role of a focal point in trading gold bars, but should only implement derivative products (with sufficient experience and expertise). If they want to trade gold bars, they should establish an independent gold company.
Third, create a distribution system in the market that allows people in all regions to benefit and have favorable trading conditions. Create a level playing field for all economic sectors, serving the majority of people from urban to rural areas.
Fourth, anti-goldenization cannot be achieved by administrative solutions but must be redirected from trading gold bars to trading other gold products (gold certificates, derivatives, etc.) on a centralized trading center. Therefore, it is necessary to soon allow the Commodity Exchange to trade gold futures through standard futures contracts like advanced countries in the world. Participating members must meet strict standards and be allowed to import and export gold. This will not incur costs to import physical gold to sell to people.
Fifth, there is currently a view that it is necessary to tax gold transactions, not only to reduce the demand for gold of the people and investors, prevent speculation and manipulation of gold prices, but also to create conditions for the State budget to have more revenue, but also to ensure fairness between investment channels of gold - stocks - real estate, as a measure to prevent "goldenization" of the economy. I do not agree with the view of taxing gold transactions - because I think that taxing gold transactions will increase the burden on gold buyers, increase the gap between domestic gold prices and world gold prices, causing people to limit gold sales. This will make gold stay in the hands of the people, not converting gold resources into financial resources for production and business, and at the same time limit the supply of gold in the economy. Therefore, it is necessary to carefully consider the proposal to tax gold transactions.
- Thank you for sharing!
