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Navigating monetary policy amid stronger economic headwinds

By Dung Nguyen

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HCMC – The recent collapse of the First Republic Bank in the U.S. has rattled the financial market. Most of the lender’s assets are being acquired by JPMorgan Chase & Co, which include US$173 billion in loans, US$30 billion in securities and US$92 billion in deposits, international media reporters said.

First Republic’s assets reached US$229.1 billion at the time of the takeover. It was the 14th-largest U.S. bank by the end of last year and has been the second-largest American bank to fail after the collapse of Washington Mutual in 2008.

The crash is the latest development of this year’s banking crisis, which has led to the collapse of Silicon Valley Bank, New York-based Signature Bank and Switzerland’s second-largest bank Credit Suisse.

For now, central banks appear to be at a crossroads as the panic is unlikely to end soon. Interest rate hikes designed to combat inflation have become a tough choice to make, given mounting concerns over a global recession.

With its growing economic openness, Vietnam is highly prone to global market fluctuations.

From sluggish post-pandemic recovery to monetary policy tightening, the economy of Vietnam has been grappling with growing challenges this year. The nation’s January-April export revenue dipped by 11.8% year-on-year at US$108.6 billion, according to the General Statistics Office.

Opportunities have emerged, though.

VND131,200 billion in public investment capital has been disbursed, increasing by 17.9% over 2022 and reaching 19% of the full-year target.

Fresh foreign direct investment approvals nationwide as of April 20 had soared by 11.1% year-on-year, and total retail sales of goods and services expanded by 12.8%.

Since March, Vietnam’s easing of monetary policy has left certain positive impact on the economy, according to experts.

The State Bank of Vietnam (SBV) has lowered key interest rates twice this year, and adopted new policies that help eliminate business obstacles like rescheduling debt payments and easing the trading of corporate bonds by credit institutions and foreign bank branches.

In light of the current situation, the Saigon Times Group and the SBV are joining hands to organize the Vietnam Banking Forum 2023 under the theme “Monetary policy in turbulent times”.

At the Vietnam Banking Forum, Dr. Can Van Luc, chief economist at the Bank for Investment and Development of Vietnam and member of the National Financial and Monetary Policy Advisory Council will discuss Vietnam’s macroeconomic prospects in the second half of the year.

Ha Thi Kim Nga, senior economist and representative of the International Monetary Fund in Vietnam, will give insights into challenges for monetary policy in Vietnam and recommendations amid global economic uncertainties.

The forum will also feature two roundtable discussions that will look into concerns over market pressure, global macroeconomic driving factors and conundrums of the domestic economy. The efforts aim at shedding light on monetary policy and seeking ways to enhance the efficiency of market instruments in turbulent times.

There will be leading experts and professionals showing up at the forum, including Dr. Pham Sy Thanh, director of the China Center for Economic and Strategic Studies; Truong Van Cam, vice chairman and general secretary of the Vietnam Textile and Apparel Association; Dr. Nguyen Quoc Hung, general secretary of the Vietnam Banks Association; and Bui Thanh Trung, deputy general director in charge of currency trading and investment at Orient Commercial Bank.

The fourth Vietnam Banking Forum, set to take place on May 10 at the International Convention Center in Hanoi, will be attended by over 120 experts in the banking sector, senior officials at the SBV and senior executives of domestic and foreign financial institutions.

The event is expected to discuss solutions to bolster the effectiveness of the monetary policy, tame inflation, stabilize the macroeconomy and reduce interest rates for Vietnam’s economic recovery.

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