Recently, there have been recommendations that the 0% interest rate policy for U.S. dollar deposits be lifted given the current situation. However, this policy has helped limit dollarization in the economy and bring many other benefits. Dollarization restricted by the zero deposit rate Recent data from the State Bank of Vietnam (SBV) showed the proportion of foreign currency deposits in total money supply decreased from 11.06% in 2014 to about 6.05% as of June 2024. Based on total money supply announced at the end of April 2024, the approximate amount of foreign currency deposits in the banking system is around VND970 trillion. Although the proportion of foreign currency deposits has decreased, the absolute figure of foreign currency deposits has soared by 1.7 times against the end of 2014. However, this spike is insignificant compared to the 3.2-fold increase in Vietnamese dong currency deposits. Clearly, as the size of the economy and the capital mobilization of the banking system climb, the surge in foreign currency deposits is inevitable. When assessing the extent of dollarization in the economy, experts will take into consideration the proportion rather than on the absolute number or growth rate. In addition to deposits, the SBV stated that […]
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