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Flexible tightened monetary policies needed: expert
Huynh Buu Son, a senior finance and banking expert, thinks that the tightened monetary policies should be maintained, but with a certain openness, allowing credit risks to be controlled and enterprises to develop.
Son said that the financial market has been stabilised and the liquidity of banks has improved. However, this does not mean that banks are completely free of difficulties. While emphasising that the tightened monetary policies are still needed for now, he said that the policies need to be flexible enough to help enterprises access bank loans to develop.
It seems that the difficulties of banks have been eased as the financial market is more stable. Do you think so?
The current situation of Vietnam’s banking system can be described as a quiet sea but with black clouds overhead. I mean the operations of banks are stable, but troubles still loom.
The black clouds are the credit that many banks provided when they were ‘living beyond their means’. The banks have injected too much money in real estate, and funded securities investments.
The scale of the storms, if they occur, will depend on the support of the State Bank of Vietnam. I mean the central bank’s capability to control the situation. Meanwhile, every bank has its own capability of dealing with problems. Currently, Vietnamese people have absolute confidence in the safety of their deposits in banks.
It is clear that difficulties still exist in the banking system. What do you think are the right measures to deal with the difficulties?
The current inflation originated from a big supply of money, a big volume of cash in circulation, and it was necessary to tighten the monetary policies to settle the problem. However, the situation is now quite different. The common problem of the whole world is lack of liquidity. Therefore, there is no more fear of an oversupply of money.
The thing we need to think about now is how to help the national economy overcome the recession, create favourable conditions for enterprises to maintain production and keep supplying products to the market.
Banks need time to adjust interest rates, and this would be better done step by step than in a short time. We also can think of adjusting the basic interest rate, but cautiously, as we need to preserve the confidence of depositors.
I think the important thing now is to reduce the compulsory reserve ratio on deposits.
Why is reducing the compulsory reserve ratio an important measure for now?
Reducing the compulsory reserve ratio is the thing we need to do first, while the basic interest rate reduction should be undertaken gradually to ensure that everything is always under control.
We need to keep providing credit to serve production and business, but we need to control the loaning carefully.
VNN
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