According to the 2010 Law on the State Bank of Vietnam, the SBV Governor determines the use of tools for implementing the national monetary policy, including the re-financing, the interest rates, the exchange rates, the reserve requirements, the open market operations, as well as other tools and measures as stipulated by the Government.
- Re-financing:Re-financing is a form of credit extension by the SBV, aiming to provide short-term loans and payment facilities to the credit institutions. The SBV stipulates and performs the refinancing for the credit institutions in the forms of extending loans guaranteed by valuable papers; discounting valuable papers; and other forms of re-financing.
- Interest rates:The SBV announces the re-financing interest rate, the key interest rates and other interest rates to implement the monetary policy, and to prevent high-interest lending. In the case of unexpected developments in the money market, the SBV may determine the mechanism for managing the interest rates applied to the lending-borrowing transactions among the credit institutions, and between the credit institutions and their customers, as well as other credit relations.(See SBV's Table of Interest Rates)
- Exchange rates: The exchange rates of VND against different foreign currencies are established on the basis of foreign currency supplies and demands in the market, with certain State regulation. The SBV announces the exchange rates, determines the exchange rate regime and the mechanism for regulating the exchange rates.(See Table of Central Exchange Rates)
- Reserve requirements: The reserve requirements mean the amount of money that the credit institutions must deposit at the SBV to enable the implementation of the national monetary policy. The SBV stipulates the ratio of reserve requirements for each type of credit institutions and each kind of deposits at the credit institutions. The SBV also stipulates the interest payment on the reserve deposits, and any excess deposits applicable to each type of credit institutions, for each kind of deposits. (See Table of Reserve Requirements)
- Open market operations:The SBV performs the open market operations by purchasing and selling valuable papers with the credit institutions; and stipulates the types of valuable papers to be traded in the open market operations.