On July 19, 2019 in Hanoi, the State Bank of Vietnam (SBV) and the Japan International Cooperation Agency (JICA) jointly organized the first high-level seminar on “Strengthening the capacity of the SBV to implement monetary policy and statistical forecast”. The seminar was chaired by SBV Deputy Governor Nguyen Thi Hong.
Also attending the meeting were representatives of the SBV’s International Cooperation Department, the Monetary Policy Department, the Monetary Forecasting & Statistics Department. On the side of JICA, there were Mr. Kitamura Shu - Vice Chief Representative of JICA Vietnam Office, some experts of the Project, namely Prof. Masahiko Takeda, Prof. Tomoyuki Shimoda, Prof. Ippei Fujiwara and JICA Vietnam Office staff.
According to the agreement between the SBV and JICA at the the second Joint Coordination Committee in May, 2019, the organization of the first high-level Seminar is aimed at presenting the research results from the commencement of the Project in 2017 to present; discussing and exchanging views about the research orientations in the coming time to obtain the final goals of the Project.
The Seminar was composed of 3 sessions to discuss the three components of the Project as follows: (i) Choosing the inflation level target of the SBV (Monetary Policy Component); (ii) Report on the process of developing the macro-economic model (Macro Model Configuration Component); (iii) Assessment Report on analytical framework improvements and economic research at the SBV (Analysis and Statistical Forecast Component).
Officials from the SBV Monetary Policy Department present initial results of the Project
With a view to answering the question of how to identify the best appropriate inflation level for Vietnam, the experts of the Project and the group of officials of the SBV Monetary Policy Department selected three research approaches: referencing the experience of other central banks in determining the inflation targets; analyzing the impacts of inflation on the growth, using different research results in the world and in Vietnam; and studying the relationship between inflation and growth.
About the component of macro model configuration, JICA experts and the group of officials from the SBV Monetary Forecasting & Statistics Department have developed a dynamic stochastic general equilibrium (DSGE) model to serve for the analysis, forecasting and support of the SBV monetary policy management. This is the most advanced model until now, which has been applied widely at many central banks because it is based on solid ground of macro and micro economic theories.
Officials from the Monetary Forecasting & Statistics Department present the initial results of the Project
At the Seminar, Prof. Shimoda presented a report on the initial assessment of the economic analysis at the SBV in order to suggest several important recommendations for strengthening the effectiveness of the policy analysis and consultancy at the SBV, such as the role of formulating a quarterly economic analysis report or the role of coordination between the government agencies and the units in synthesizing data and statistics for policy forecasting and planning. This report was formulated based on the interviews with various SBV officials about the situations, with comparative analyses with some central banks in the world such as the FED, the ECB, the BoJ and the Bank of Thailand.
JICA experts make presentations at the Seminar
Speaking at the Seminar, Deputy Governor Nguyen Thi Hong highly appreciated the efforts of the SBV research team and the experts, and the initial results that the Project has achieved. The SBV Deputy Governor emphasized that the results presented at the Seminar showed the relevance and rationality in the approach; the connection of the models being used by the Project in order to draw conclusions about identifying an appropriate inflation level for Vietnam.
According to SBV Deputy Governor Nguyen Thi Hong, with these models, the most important thing is data. Therefore, the research groups should not only use the data of the banking system but also integrate all data of the economy such as investment, consumption, trade, import-export... She requested the SBV entities to collect appropriate data based on the implementation models; in case of not being able to collect by themselves, it is possible to request for coordination from the relevant ministries and agencies.
An overview of the Seminar
On behalf of the SBV Management Board, the SBV Deputy Governor expressed her thanks for JICA's enthusiastic, practical and timely support over the past time, especially the close coordination during the implementation of the Project "Strengthening the capacity of the SBV to implement monetary policy and statistical forecast”, which has been implemented for the period of 2017-2020 with the aim of enriching the knowledge and the skills on economic analysis, forecasting and policy making for the SBV senior officials, thereby helping the SBV improve its capabilities of analyzing and forecasting in order to manage the monetary policy, and enhance the capability to conduct monetary policies in a flexible and effective manner, contributing greatly to the macroeconomic stability and sustainable economic growth.
Le Hang