On May 11, 2023, in Hanoi, the State Bank of Vietnam (SBV) and the Work Bank (WB) jointly organized a Workshop on International experience on green central banking and the role of central banks in simulating green credit.
An overview of the Workshop
Speaking at the Workshop, Mr.To Huy Vu, Director General of the SBV International Cooperation Department, shared that over the past time, Vietnam has actively participated in the international commitments on green transition and greenhouse gas emission reduction towards sustainability, and the commitments for “net-zero” emissions by 2050 made at COP26, as well as the Political Declaration on establishing the Just Energy Transition Partnership with Viet Nam.
Mr.To Huy Vu, Director General of the SBV International Cooperation Department, speaks at the Workshop
In light of the fact that the needs for climate change responses have become urgent, with the commitments and political declarations to the international community, the Government of Vietnam has been rapidly implementing a series of actions towards a low-carbon economy and energy transition. The Government has assigned the SBV to mobilize resources for green growth; review and improve the legal framework for green credit; develop mechanisms and policies to create favorable conditions for green credit; research and develop a green bank model.
Sharing at the Workshop, Mr. Martijn Regelink, WB Senior Financial Sector Specialist, affirmed that the role of central banks in promoting green credit and greening the banking sector is critical. Currently, the Government, the Ministries and agencies, including the SBV, have been developing action plans to realize this vision, seeking and mobilizing technical and funding resources as a part of the process. The central banks’ “green” tools have the potential to facilitate green credit and green finance.
A representative of the Department of Credit for Economic Sectors, as the entity directly engaged in researching and implementing solutions to promote green credit under the SBV, further shared that the SBV has finalized the orientations and strategy for green credit development; provided guidance for the credit operations aimed at green industries/green fields, and the management of environmental and social risks, an example was the promulgation of Circular No.17/2022/TT-NHNN providing guidance for the environmental risk management in credit granting activities. As a result, 39/129 credit institutions have generated green loan outstandings, totaling more than VND 500,524 billion, and accounting for 4.2% of the economy's credit outstanding, focusing mainly on clean energy, renewable energy (taking up 46.7%) and green agriculture (over 31%). In the period of 2017-2022, the average growth rate of the green credit outstanding reached nearly 23% per year, higher than the overall credit growth rate of the economy.
Mr. Martijn Regelink, WB Senior Financial Sector Specialist, speaks at the Workshop
Professor Ulrich Volz, Director of the SOAS Center for Sustainable Finance, delivered a presentation sharing his perspectives of the actions taken by the People’s Bank of China, including the principles and requirements, tools for implementation, reporting and disclosure, implementation results in the field of green credit; the use of the monetary policy tools and other incentives to promote green credit, such as the regulatory ratios, the partial acceptance of green investments as collaterals, the performance and the costs.
Within the framework of the Workshop, there was also a Q&A session on lessons learned from the central banks’ operations in promoting a green credit market.
Le Hang