Central bank backs down on currency

Central bank backs down on currency

After proposing publicly to ban people from giving foreign currency as gifts, the State Bank of Viet Nam (SBV) reversed its position, writing that the practice was "reasonable" in a draft decree on Foreign Exchange Ordinance released last week.

"As provisions of the Foreign Exchange Ordinance allow individuals with foreign currencies to deposit and receive principal and interest in foreign currencies, the use of foreign currencies as gifts is reasonable," the central bank wrote.

In late October, SBV announced a draft decree to replace Decree 160, which guides the implementation of the Foreign Exchange Ordinance. Among its contents, the ban attracted by far the most public attention.

While the drafting committee intended the prohibition to prevent dollarisation, people feared it would interfere with local customs. Vietnamese have a tradition of gifting foreign money during the Lunar New Year, believing that US$2 bills and other foreign currency bring good luck.

Experts also warned that the ban would affect the legal flow of foreign remittances. A past regulation banning people from receiving remittances in foreign currency saw the proliferation of illegal remittances.

The proposed decree will be submitted to the Government, and, if approved, will supersede Decree 160.

vietnamnews