Workshop on Financial stability and its implementation situation in Vietnam

The Workshop was attended by Mr. Nguyen Vinh Hung, Deputy Director General in charge of the Monetary and Financial Stabilization Department. From the World Bank, there was Mr. Ketut Ariadi Kusuma, Coordinator of the Financial Area; Mr. Trieu Quoc Viet, Senior Financial Specialist, Task Team Leader of the Project; Mr. Jeans Froncois Bouchard, World Bank Consultant. Besides, there were also representatives from several SBV entities, relevant Ministries, government agencies as well as economic experts.

In his opening speech at the Workshop, Mr. Nguyen Vinh Hung, Deputy Director General in charge of the Monetary and Financial Stabilization Department, emphasized that lessons learned from the 2008 financial crisis had made regulators be more aware of the role and the need to fill the legal gaps and the data gaps, as well as the need to strengthen the awareness of macro-financial linkages and the policy tools to handle systemic risks.

Mr. Nguyen Vinh Hung, Deputy Director General in charge of the Monetary and Financial Stabilization Department, speaks at the Workshop.

Financial supervision agencies around the world used to under-evaluate these macro linkages, the systemic risks of the financial sector, as well as the linkages between the financial stability and the macro-economic stability. Although many countries had performed satisfactorily the traditional financial supervision functions (micro supervision) and maintained healthy macro-economic policies, financial crises had still occurred. "Especially in the current period, when the COVID-19 pandemic had been going on during the past two years, many economies around the world had fallen into difficult situations, and the global supply chains had been disrupted, while inflation had the tendency to increase. This situation has forced many governments, including Vietnam, to try and find appropriate solutions to overcome the pandemic, recover and develop the economy, and ensure a safe and stable life for their citizens," Mr. Nguyen Vinh Hung further shared.

This Technical Assistance Project, which is supported and funded by the WB and SECO, aims to strengthen the SBV's overall capacity in order to address structural shortcomings in the banking system, and to approach the international standards. An important component is strengthening the SBV's macro supervision capacity in order to forecast and manage potential risks arising from the banking sector and the financial markets, contributing to ensuring financial stability.

Through this Workshop, the SBV wishes to further strengthen the coordination mechanism with the relevant agencies, especially with the National Financial Supervision Commission, the Ministry of Finance, the Ministry of Construction, and the Ministry of Planning and Investment in order to perform successfully the tasks of maintaining financial stability, forecasting and addressing any risks to the financial system and the economy of Vietnam. In addition, the SBV also hopes to strengthen the cooperative partnership and the support and experience sharing with the WB, SECO, international organizations and the central banks of other countries in order to build a safe and healthy global financial system for sustainable development.

Speaking at the Workshop, Mr. Ketut Ariadi Kusuma, World Bank Coordinator of the Financial Area, shared that there had been different factors causing financial shocks, not just from a single risk of the financial institutions. These risks are transmissible, and may spread among the systems, between financial and non-financial markets, between sectors in the real economy, and are interactive among different institutions and markets. The impacts of the financial instability on the economy and the budget of a country are huge.

Mr. Ketut Ariadi Kusuma, World Bank Coordinator of the Financial Area, speaks at the Workshop.

Mr. Ketut Ariadi Kusuma further shared that the crises caused by the COVID-19 pandemic in many countries had clearly reflected the need to develop buffers in the macro-prudential policy, even when the economic situation is stable; the readiness to implement tools when difficulties arise; and the readiness to loosen the buffers when the economy is faced with difficulties. The coordination between the micro and the macro prudential policies would also greatly support the fiscal policies, avoiding negative impacts. Banks, financial sectors played an important role in the recovery of the economy.

At the Workshop, the participants also exchanged, discussed and shared experience on other matters, such as the overview of the macro-prudential policy and the macro-prudential policy tools; the components of an effective macro-prudential policy; the financial stability analysis; the main features of the current macro-prudential situation in Vietnam; international experience in coordination and information sharing among supervision agencies; international experience in macro-prudential policy implementation; etc.

LK