According to PhD Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management, black credit in Vietnam currently accounts for about 30 percent of official credit, roughly US$50 billion.
|When people’s confidence is challenged by the official monetary market, they switch to the black market and encourage the black market to grow. (Photo: SGGP)|
Black credit is part of the shadow banking system. Although shadow banking is not totally bad, black credit in particular and shadow banking in general leaves negative socio-economic corollaries. For instance, money and credit supply cannot be fully controlled. Moreover, when black credit bursts, it does not only leave consequences for the economy, but also affects confidence and other social affairs.
Former Deputy Prime Minister Vu Khoan said that shadow banking causes social unrest. However, when people’s confidence is challenged by the official monetary market, they switch to the black market and encourage the black market to grow. Therefore, it is essential to reorganize official market to fortify people’s confidence, instead of taking administrative measures to resolve this issue.