Economic committee worried about monopoly in gold trading
Economic committee worried about monopoly in gold trading
In its latest bulletin, the National Assembly’s Economics Committee pointed out that big problems still exist in the gold market management: the most important targets remain unattainable; the gap between the domestic and the world’s price is still wide.
The 36-page ninth macro economy bulletin released some days ago, on the threshold of the autumn economic forum, to be held in Hue City on September 25-26, comprises of the 3-page comments and viewpoints on the monetary policies.
The public special attention has been driven to the monetary policies, including the gold market management, might come from the last year’s National Assembly’s Resolution, which said putting the gold market under the management was a specific task assigned to the State Bank.
The National Assembly requested to fix the problems in the management, stabilize the gold market, narrow the price gap and ensure the legal benefits of people.
“Though the State Bank continues providing gold to the market through bidding, the gap between the domestic and the international prices remains big,” the bulletin wrote.
From March 28 to September 19, the State Bank organized 60 bidding sessions, where it sold 59.1 tons of gold. A report of the bank showed that 30 tons of gold has been sold to commercial banks which used the gold to pay back to gold depositors. This must be done by June 30 as requested by the State Bank.
The report also said the price gap reached its peak at VND6.6 million on July 8, but then got narrowed to VND3-4 million per tael.
The authors of the bulletin said it was understandable why the gap price was big prior to June 30 – the gold demand from banks was big because they needed to buy gold to pay back to gold depositors. However, if the price gap is still big after that day, it is necessary to reconsider the efficiency of the current gold market management methods.
They have expressed the worry that the significant price gap would trigger the smuggling activities. Smugglers would collect dollars on the black market to import gold for domestic sale.
In the context of the current uncertainties, hoarding gold is still believed to be the safest way to preserve one’s assets. Therefore, the demand for gold is always very high.
The fact that the State holds the monopoly importing and providing gold has raised the worry that the national foreign currency reserves would reduce, since Vietnam has to spend foreign currencies to import gold.
Another worrying problem cited in the bulletin is that the State Bank both undertakes the task of managing and supervising the gold market and makes gold trade, while the two functions still cannot be separated.
Meanwhile, the administrative orders may help the State Bank obtain its goals in short term, but will cause long term consequences. If the monopoly policy still continues, the market rules still cannot be followed, the risks would break out one day.
The macro economy bulletin is an important part of the project on assisting to heighten the capability of giving advices, verifying and monitoring the macroeconomic policies implemented by the National Assembly’s economics committee, with the technical assistance of UNDP.
vietnamnet
