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State Bank may double charter capital

The State Bank of Vietnam is likely to double its charter capital to
10 trillion VND (476.2 million VND) from August 15 this year in a bid
to better stabilise the country’s monetary market, according to a draft
circular.

It the increase goes ahead, the Fund for National
Monetary Policies will also be doubled as the draft states that the fund
must be equal to the SBV’s charter capital.

The SBV will be
allowed to use the fund to stabilise the country’s monetary market.
Besides addressing the threat posed by credit institutions that fail and
damage the banking system, the SBV can also use the fund to contribute
capital to or buy stocks of credit institutions that are put under SBV’s
special control due to weak finances.

Deposit Insurance of
Vietnam will also be allowed to borrow from the fund to maintain the
stability of credit institutions in case other funds are not available
for payment.

With the charter capital’s increase, the SBV will
likely have to set aside double provisions for the Fund for National
Monetary Policies to 20 percent of annual difference between the central
bank’s revenues and expenses.

According to the draft, SBV will
still maintain 10 percent of its annual revenue expense difference for
the financial provision fund, but it will not be allowed to exceed 25
percent of the central bank’s charter capital.
The SBV will report the fund’s revenues and expenses to the Ministry of Finance every quarter.-VNA

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