Within the working visit to attend the 92nd Annual General Meeting of the Bank for International Settlements (BIS), on June 25, 2022, Governor Nguyen Thi Hong of the State Bank of Vietnam (SBV) had a meeting with Governor Rhee Changyong of the Bank of Korea (BoK), and another meeting with Governor Yannis Tournaras of the Bank of Greece.
Governor Nguyen Thi Hong had a meeting with BoK Governor Rhee Changyong
At the meeting with the BoK Governor, Governor Nguyen Thi Hong congratulated Mr. Rhee Changyong on his appointment as BoK Governor. The SBV Governor also expressed her gratitude, and confirmed that the technical assistance and other support projects provided by the International Monetary Fund (IMF) and the Asian Development Bank (ADB) to Vietnam, during the time when Mr. Rhee Changyong was the IMF Director of the Asia and Pacific Department, and the ADB Chief Economist, had greatly contributed to the implementation of the socio-economic targets, enhancing the state management capabilities and the policy management of the SBV, as well as other Ministries, agencies and local authorities.
The SBV Governor welcomed and spoke highly of the cooperative relations between the SBV and the BoK through the activities of experience sharing and policy consultancy, especially within the framework of the BOK Knowledge Partnership Program (BoK-KPP), which had been developed and implemented since 2016. She added that the consultancy reports co-formulated by the two sides had been helpful references, serving for the policy making and the management of the SBV.
Moreover, Governor Nguyen Thi Hong also expressed high appreciation for the support from the BoK to the SBV in the areas of monetary policy management, banking supervision and inspection, non-performing loan (NPL) resolution, payment system development, etc., contributing to improving the legal framework and enhancing the capacity of the SBV staff in the process of conducting a central bank’s operations, such as monetary policy-making, supervision of the payment system, forex reserve management, etc.
The two sides exchanged their views on the internal and regional monetary situations in the context of high inflations and challenges faced by the central banks around the world. Towards the end of the meeting, the two Governors agreed to further strengthen the cooperative relations, including the areas of education and training, experience sharing, and NPL resolution.
Governor Nguyen Thi Hong meets Bank of Greece Governor Yannis Stournaras
On the same day, Governor Nguyen Thi Hong had a meeting with Mr. Yannis Stournaras, Governor of the Bank of Greece. The two sides exchanged their views about the legal frameworks for NPL resolution. The SBV Governor shared that Vietnam has been in the process of restructuring the banking sector in order to enhance the efficiency and the safety for banking operations. In the restructuring process, Vietnam has been studying the experience from other countries, especially regarding the formulation of the legal frameworks for NPL resolution, thereby enabling commercial banks to operate healthily and sustainably. The SBV Governor highly appreciated the specific information provided by the Bank of Greece in response to the SBV’s questions related to the framework for NPL resolution, and expressed her hope that the two sides would establish an official cooperative partnership in order to exchange more information and experience in the fields that the two sides are interested in.
Sharing the Bank of Greece’s experience in resolving NPLs, Governor Stournaras said that Greece used to be among the countries with the highest NPL ratios in Europe, especially in September 2016, when the ratio reached 47.1%. That was a consequence of the global financial crisis in 2008-2009. In 2015, Greece promulgated the Law on NPL Management and Transfer, with the initial purpose of creating a secondary market for transferring NPLs, but then it was expanded to also allow NPL acquisition and settlement.
In December 2019, Greece promulgated Law 4649/2019 (known as Hercules Law), which creates the foundation for a government guarantee scheme named Hercules Asset Protection Scheme, in order to facilitate NPL resolution. The Hercules Scheme’s effectiveness is within 18 months since the announcement of the European Commission’s Decision (December 10, 2019). Hercules Scheme has been assessed to be successful, helping to reduce sharply the NPL ratio in Greece. In March, 2021, the Government of Greece decided to extend Hercules Scheme to an additional time of 30 months.
Governor Nguyen Thi Hong presents a souvenir with the SBV logo to the Bank of Greece Governor
Governor Stournaras stated that he would be willing to share Greece’s experience lessons in resolving NPLs, the fundamental requirements and the means of operation of Hercules Scheme with the SBV and other relevant authorities of Vietnam, as well as to enhance the bilateral cooperation in other fields.
Le Hang