Vietnam contemplates national gold exchange

Vietnam is mulling over the setup of a national gold exchange in order to put citizens public gold into circulation.

Expected gold exchange

Many economists have applauded the idea, while saying that it takes between three and five years to launch such an exchange.

Supporters caution that the country needs to prepare well in terms of technique before launching such a programme.

Tran Thanh Hai, General Director of Vietnam Gold Investment and Trade Corporation, said such an exchange will help reduce gold storage among locals and boost gold transactions.

It will also mitigate risks to investors with more effective management. Dinh Nho Bang, Vice Chairman of the Vietnam Gold Business Association, said the institution is coordinating with the State Bank of Vietnam and the National Committee for Financial Supervision (NCFS) to gather opinions on the issue.

To better manage the exchange, the association proposed building a mechanism in which the government does the licensing but authorises relevant ministries to manage the operations.

NCFS’s Vice Chairman, Le Xuan Nghia, said the demand for gold transactions is large in Vietnam. This is proven by the fact that in the past, gold floors had attracted a large amount of money right after they opened. He elaborated that if official gold exchanges are not set up, people will trade it in unofficial ways.

Nghia also acknowledged that, “Regardless of difficulties, it is necessary to set up a national gold exchange under the management of the SBV to meet the increased transaction demand.”

The proposed exchange is expected to address the fact that many people and companies have opened accounts to trade gold abroad. This has triggered a possible foreign currency scarcity. It will also help balance the gap in the gold prices between the Vietnamese market and the world market.

Also, Le Tham Duong, head of the Ho Chi Minh City University of Banking’s Business Administration Department, said it is the right time for Vietnam to set up such a national gold exchange to manage the market more effectively.

Duong emphasized the importance to compile legal documents to guide the operations of and manage the exchange.