The Expert Also Believes Gold Is a Fairly Ordinary Commodity That Anyone Can Use and That the State Can Easily Regulate, Without Necessarily Maintaining a Monopoly

Guests at the seminar (from right): Prof. Dr. Hoang Van Cuong, National Assembly Deputy and Member of the National Assembly’s Finance and Budget Committee; Nguyen Viet Anh, Deputy General Director of TP Bank; and Nguyen The Hung, Vice Chairman of the Vietnam Gold Traders Association. Photo: VGP/Quang Thuong

On the morning of January 25, the Government Portal organized a seminar on “Solutions for Developing a Safe and Sustainable Gold Market.”

At the seminar, Prof. Dr. Hoang Van Cuong, National Assembly Deputy and Member of the National Assembly’s Finance and Budget Committee, said the Government issued Decree No. 24/2012/NĐ-CP to curb “goldization,” the use of gold in place of payment instruments. The issuance of Decree No. 24/2012/NĐ-CP was very timely. The practice of using gold as a means of transaction has largely been brought under control.

However, according to Cuong, the situation has changed considerably. There have been many changes in macroeconomic conditions, financial and monetary relations, international relations, and other areas. In practice, over the past several years, the State has effectively designated a single gold brand, SJC, as the national gold brand. Regardless of the monopoly, gold should still be produced and supplied as needed, but in reality, virtually no additional gold bars have been produced.

Meanwhile, people not only in Vietnam but around the world tend to accumulate gold to ensure security and hedge against risks. With SJC designated as the national gold brand, people accumulating gold naturally choose what they regard as the most trusted gold: SJC.

Cuong also explained that there is no transfer program for gold imports. For example, when domestic prices are high, gold could be imported to restore balance. When domestic prices are low and global prices are high, gold could be exported to restore balance. However, such an import-export relationship does not exist here. As a result, a slight increase in global prices can lead to a sharp increase in domestic prices.

There is also currently unequal treatment of otherwise identical gold bars. They may have the same 9999 fineness, but gold bearing the SJC name, which is protected by the State, commands a very high price. Other gold brands without that protection naturally sell for less.

This situation harms not only individuals but also society. Such a large gap between domestic and global gold prices makes gold smuggling profitable. If the State does not license gold imports, people will smuggle it. Smuggling, in turn, will continue to cause foreign currency losses. An inability to control foreign currency flows can also create problems for exchange rate management.

“Faced with this situation, we must consider changing and amending the provisions of Decree No. 24/2012/NĐ-CP. For example, there is no longer necessarily a need for a state monopoly on a single gold brand. Gold is perhaps a fairly ordinary commodity that anyone can use, and the State can regulate it very easily, without necessarily maintaining a monopoly. I believe we need to reconsider whether a monopoly is really necessary,” Cuong said.

He proposed allowing multiple businesses to participate in gold bar production to meet people’s needs. When supply is unrestricted and competition is fair, people will find it easier to buy gold for their savings, and shortages will no longer occur. The prevailing mentality is that the scarcer gold becomes, the higher its price rises and the more people rush to buy it. Once it is no longer scarce, that pressure will ease.

Another factor is the need for a transfer program between the domestic and international markets. Rather than simply maintaining the previous mechanism of granting licenses and quotas through a discretionary approval system, financial instruments could be used to regulate imports and exports. Of course, oversight is necessary to prevent the massive use of foreign currency to import gold for other purposes, which would create foreign currency imbalances and undermine the ability to manage exchange rates.

Cuong also believes that more diverse trading methods are needed. The global trading trend is toward exchange-based trading through trading contracts and gold credits. If additional forms of account-based gold trading are introduced, the availability of gold will no longer depend so heavily on whether large or small quantities are imported. Instead, instruments such as derivatives could be used to balance supply and demand immediately. This would allow very flexible management and, in particular, eliminate the practice of people buying gold and storing it at home, leaving a substantial amount of money idle. With account-based gold trading, people would not necessarily have to take gold home or go to the trouble of storing it. That gold would circulate in the market, generating returns and releasing capital into circulation, bringing many benefits to the economy while safeguarding each individual’s interests.

Ngoc Bich (compiled)

An ninh Tien te

Link: https://cafef.vn/chuyen-gia-de-xuat-mo-them-hinh-thuc-giao-dich-vang-qua-tai-khoan-nguoi-dan-khong-phai-mua-vang-ve-de-trong-nha-tich-tru-188240125143313251.chn

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