Strict measures required to curb dollarization, experts say

Dollarization in most economical sectors is one of the major factors causing instability in the foreign currency market. Dau Tu Tai Chinh Newspaper interviewed officials and economists about solutions for the issue.

A client lists types of dollars before selling to Asia Commercial Bank. Economists propose to limit licensing foreign currency exchange shops (Photo:Minh Tri)

Nguyen Hoang Minh, Deputy Director of the State Bank of Vietnam’s HCMC branch
Illegal foreign currency purchase on the so-called black market is one of the key reasons speeding up the dollarization in the country.

Therefore, forbidding dollar exchanges on the so-called black market must be the government’s top priority. The central bank’s Decision No. 21 limited the number of foreign currency exchange shops.

Statistics show there are around 78 shops in HCMC licensed by the state bank’s HCMC branch, of which only 1-2 jewelry shops are allowed to exchange dollar. However, the actual number is up to nearly 4,000 jewelry shops illegally offering the exchange service.

The central bank’s HCMC branch has planned to check the licensed shops and also sent the list of them to police. We also proposed the central bank and the city People’s Committee for strictly punishing non-licensed shops, confiscating the entire amount of cash in violation cases.

Dr. Le Xuan Nghia, Vice Chairman of National Financial Supervisory Commission
Dollarization is causing unexpected impacts to the economy, as well as difficulties to the management of the monetary market.

However, the issue can not be ended immediately. At the outset, I think we should add the dollar depositing and lending services of commercial banks into foreign currency purchase service.

According to the central bank’s regulations, residents are allowed to own dollars, hindering the management of foreign currency exchanges on the so-called black market. The deposits in dong of lenders make 70 percent, while the deposits in the greenback make 30 percent.

We should limit lending dollar and gradually stop the service for good.

Dr. Tran Du Lich, member of the National Advisory Council for Financial and Monetary Policies
If we do not strictly supervise foreign currency purchases, a large amount of dollars will still be in circulation outside of banks, creating the so-called black market.

We need strict measures to curb dollarization. However, the central bank has to ensure it has enough dollars to import necessities and to meet up the legitimate demand of individuals and local businesses.

In the near future, dollars depositing into banks are required to have certificates of origin. The government should also cut public spending in dollars.

Dr. Cao Sy Kiem, former governor of the State Bank of Vietnam
The central bank has carried out strict measures on gold and dollar purchases on the so-called black market. This is a stepping-stone for the state bank to battle dollarization.

Foreign currency is a special commodity, which is managed by the government only. Thus, the central bank need to be stricter on speculation.

By Thanh Nhu – Translated by Vu Minh

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