Flexible Management of Monetary Policies

In recent years, the State Bank of Vietnam (SBV) has run monetary
policies with the motto of keeping the macroeconomic foundation, creating a
favorable environment for businesses’activities. The large capital demand and
the banking system are still the main capital channels for the economy, in which
the proportion of medium and long-term loans as well as investment capital for
is enormous, leading to the regularly high pressure on capital. However, despite
being under the pressure of international and domestic interest rates, the State
Bank timely operated market tools to control the interest rate stability, at the
same time reduced prime lending rate as it was allowed by the market
conditions.

According to the Governor of SBV Le Minh Hung, banking sector

provided VND 8.2 million to the economy in 2019. Notwithstanding giving
such a large amount of liquidity, the State Bank has actively regulated monetary
policy for controlling. Remarkably, the credit outstanding balance to businesses
were over VND 4 quadrillion, accounting for more than 53%; in which state-
owned enterprises are approximately 5% of the total outstanding credit for the
whole enterprises. While private enterprises account for 43% of the total
outstanding credit, business households and individuals account for about
45.7%. It can be said that a huge source of credit has been focused on the
business community, especially private enterprises and individuals.