On December 31, 2021, the Governor of the State Bank of Vietnam (SBV) issued Circular No. 26/2021/TT-NHNN providing guidance for the foreign currency transactions between the SBV and the credit institutions authorized to conduct foreign exchange operations. This Circular only regulates the foreign currency transactions between the SBV and the credit institutions, and has no effect on individuals, enterprises and economic organizations, etc. The foreign currency transactions between the SBV and the credit institutions in the domestic market are aimed to support the foreign currency interventions in line with the plan decided by the SBV for each period.
Circular No. 26/2021/TT-NHNN is composed of four (04) Chapters and twenty-two (22) Articles, and shall replace Circular No. 02/2012/TT-NHNN dated February 27, 2012 providing guidance for the foreign exchange transactions between the SBV and the credit institutions, the foreign bank branches (as amended and supplemented by Circular No. 27/2013/TT-NHNN dated December 5, 2013 and Circular No. 45/2014/TT-NHNN dated December 29, 2014). The new Circular is aimed to: (i) simplify the dossiers of establishing foreign currency trading relationships, providing more specific guidance on the transaction processes; (ii) supplement the forex options trading as a type of transaction type and the related terms and terminology in order to ensure consistency with the other legal documents issued by the SBV; (iii) amend the substances to ensure consistency with the changes in the use of London Interbank Offered Rate (LIBOR) in the financial market.
Specifically, regarding the scope of application, subjects of application, this Circular provides guidance for the foreign currency transactions between the SBV and the credit institutions authorized to conduct foreign exchange operations. The SBV shall conduct foreign currency transactions with the credit institutions authorized to conduct foreign exchange operations in the domestic market according to the plan decided by the SBV for each period.
The credit institutions authorized to conduct foreign exchange operations willing to establish foreign currency transaction relationships with the SBV shall submit dossiers for registration of establishment of foreign currency transactions to the SBV in accordance with the applicable regulations. After that, the SBV shall confirm the establishment of foreign currency transaction relationship with the authorized credit institution on the basis of checking the completeness and accuracy of the dossiers. Regarding the dossiers for establishing foreign currency transaction relationships, the Circular has abolished the requirement for a copy of the License and other documents proving that the relevant credit institution is permitted to provide foreign exchange services in the domestic market.
The Circular also stipulates the transaction types between the SBV and the credit institutions authorized to establish foreign exchange transaction relationships with the SBV, in which, supplementing forex options trading type; amending the regulations on the transaction terms to allow higher flexibility according to the announcement of the SBV in each intervention plan.
Besides, the Circular supplements more specific guidance for the transaction process and the forms by which the credit institutions can send transaction confirmations after telephone transactions and submit foreign currency transaction requests to the SBV. The Circular also specifically stipulates the means and language of the transactions, the time and payment for the transactions, the suspension and cancellation of transaction relationships; the means of reporting; the responsibilities of the authorized credit institutions and the SBV units.
Authorized credit institutions that have established foreign exchange transactions with the SBV before the effective date of this Circular may continue to conduct foreign currency transactions with the SBV in accordance with the provisions of this Circular, and shall not need to re-register with the SBV.
Circular No. 26/2021/TT-NHNN will take effect from February 15, 2022.
LK