Within the framework of the ASEAN Finance Ministers’ and Central Bank Governors’ Joint Meeting, on April 3, 2024, Governor Nguyen Thi Hong of the State Bank of Vietnam (SBV) attended a High-level Seminar themed “Making the Most of Opportunities in a Changing World”, which was held in Luang Prabang, the Lao P.D.R., as one of the panelists, together with the Governors from the Bank of the Lao P.D.R., Bank Negara Malaysia, and the Bank of Thailand, as well as the IMF Deputy Managing Director, and the IFC’s Resident Representative in the Lao P.D.R.
Governor Nguyen Thi Hong and other panelists at the High-level Seminar on “Making the Most of Opportunities in a Changing World”
Also attending the Seminar, there were other representatives from the central banks and the Ministries of Finance of the ASEAN member states, the international organizations and financial institutions in the region.
This was a high-level event on the sideline of the ASEAN Finance Ministers’ and Central Bank Governors’ Joint Meeting in 2024, with the aim to discuss the long-term development trends around the world and how to make the most of opportunities from those trends to promote the economic growth. The Seminar was co-organized by the IMF and the Bank of the Lao P.D.R. (BOL), in the context of many difficulties, challenges and uncertainties around the world and the regional economies.
The SBV Governor speaks at the Seminar on “Making the Most of Opportunities in a Changing World”
Discussing the economic structure shifting, Governor Nguyen Thi Hong shared that one of the features in the transition of the economic structure in Vietnam was the parallel development of both industry and service sectors. In the context that the capital market has not been developed to its full potential, the economy depends mainly on the medium and long term capital from the banks, putting a lot of pressure on the banking sector and the macro safety. The SBV has been proactively conducting various measures and policies to promote credit, meeting the capital demand of the economy, directing the capital flows to the production and business activities, the priority sectors and the growth drivers.
All of the panelists at the Seminar agreed that the practical situations in the transition of the economic structure reflect the fact that the management of the monetary policy, the inflation control, the maintenance of the macro-economic stability, and the implementation of the credit policies by the central banks have been contributing significantly to creating a foundation for the sustainable economic development, and the promotion of the industrialization.
The panelists also agreed that the transition of the economic structure in the ASEAN member states is experiencing a new dynamic, that is the digital transformation and green transition. The SBV Governor said that, with its role as the lifeblood of the economy, Vietnam’s banking sector is always aware of its mission of being a pioneer in the process of promoting the national digital transformation, as well as its responsibility for “greening” the investment capital flows for sustainable development.
About the digital transformation, the SBV Governor shared that, over the past time, the digital transformation in the banking sector has been implemented strongly in all aspects, such as awareness raising, institutional development, technological infrastructure and service development, as well as security and safety. This is reflected through the remarkable growth figures in the numbers of transactions, the numbers of users and the payment services; digital banking has become a familiar part in the life of the people and enterprises.
About green transition, Governor Nguyen Thi Hong asserted that, as one of the most vulnerable countries to climate change, over the past time, Vietnam has always proactively and robustly implemented a lot of activities in response to climate change, heading towards green growth and sustainable development. The challenges from climate change are putting Vietnam’s banking sector at systemic risks, requiring the banking industry to review its risk appetite, its development strategies and operational orientations; re-assess all of the affected subjects to formulate a long term strategy for ensuring sustainable development.
Governor Nguyen Thi Hong presents a gift to the Governor of the BOL
Moreover, Vietnam’s banking sector has proactively implemented practical actions to respond to climate change, such as formulation and improvement of the legal frameworks and policies on credit and banking operations in alignment with the green growth goals; introduction of guidelines for classifying risks in credit granting; updating international practices for risk management in response to climate change; mobilization of financial resources and policy advice from the international financial institutions in order to support relevant projects on climate change adaptation and mitigation. As a result, during the 2017-2023 period, the total loan outstanding for green fields rose by over 22% per annum on average. Vietnam is one of the 38 developing markets with encouraging progresses in the efforts of promoting the finance and banking sector towards sustainable development; and it is also ranked at a high level as compared to other Asian countries in the implementation of the key substances of the Paris Agreement.
In addition, at the Seminar, the Governors of Bank Negara Malaysia, the BOL and the BOT also shared their experience in restructuring the financial systems to realize the goals of climate resilience; the necessity of integrating the trends of the population transition into the financial and monetary policy decision-making; the policy implications for the central banks to make the most of the development opportunities in the new context.
Le Hang