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The Vietnam National Bank was officially established under Decision 15/SL dated May 6, 1951 of President Ho Chi Minh. Over the last decades, the banking sector has made remarkable development and contribution to the national cause of construction, protection and development.

Financial and monetary developments in 1945 -1954

After the August Revolution Triumph on September 2nd, 1945, President Ho Chi Minh declared the Proclamation of Independence, which gave birth to the Democratic Republic of Vietnam. The young government of workers and farmers class faced great challenges in solving urgent livelihood issues, consolidating and strengthening their government power, and at the same time, defending their new state from sabotage conducted by the French colony and other anti-revolutionary forces. The revolutionary government faced many financial challenges: just over 1.25 million piastres of Indochina currency remained in the Treasury, half of which were torn notes; Bank of Indochina was still in the hand of the colonists, who were trying to sabotage the Republic’s monetary system; and the new government’s revenues were small compared to its necessary expenditures... The government responded to these challenges by asking the people to make financial contributions through appeals such as “Independent funds" and "Gold Week", and urgently prepared to issue bank notes.

Responding to an appeal by President Ho Chi Minh in December 1946, the whole nation entered into a long struggle of resistance against the French colony. To accommodate the Republic’s war-time economic requirements, the Government established three currency zones, which were allowed to issue regional currencies. The government also increased its revenues through various measures, such as issuing Resistance War Bonds, National Bonds,... On February 3, 1947, the Production Credit Office, the first credit institution in Vietnam, was established to provide funds for production restrict usury in rural areas, facilitate policies to reduce interest rates, and finance collective businesses.

The 2nd National Party Congress (February 1951) set new economic and financial policies. These policies clearly stated that fiscal policy must be closely combined with economic policy. They also approved the creation of Vietnam National Bank and issued new bank notes to stabilize monetary policy and improve the credit mechanism. Accordingly, on May 6, 1951, in Bong Cave, Tan Trao Commune, Son Duong District, Tuyen Quang province, President Ho Chi Minh signed Decree No. 15-SL to establish the Vietnam National Bank (VNB) with mandates of managing bank notes issuance and circulation, and the State Treasury; mobilizing funds and lending for production and commerce; conducting financial management through administrative measures and foreign exchange management and fighting in monetary front.

VNB’s organization comprised the National Bank, inter-regional banks, and provincial and municipal banks. Its first headquarter was located in Dam Hong Commune, Chiem Hoa District, Tuyen Quang Province.

The establishment of the Vietnam National Bank (VNB) on May 6, 1951 was an important historical milestone in the development of Vietnam’s monetary and banking systems. Since its inception, VNB's activities contributed greatly to the Republic’s monetary independence and autonomy by promoting production, commerce, funding for state-owned enterprises, and financing for the resistance against the French colony.

Financial and monetary developments in 1955 -1975

After the Genève Agreements (July 20, 1954), North and South Vietnam were temporarily separated. The Party’s general strategy for the Vietnam Revolution in this period was to build socialism in the North, while implementing the national and democratic revolution in the South.

The VNB revoked all the enemy’s bank notes in the newly liberated regions and established a unified money market in the North. The banking network expanded to serve districts and towns, while the number and qualification of banking professionals were improved. On October 26, 1961, the Vietnam National Bank was renamed the State Bank of Vietnam (SBV).

In the period 1955 – 1965, the SBV fostered the credit expansion to support economic recovery, especially for the growth of collectives, the development of small and handicraft industrial production and the financing of state-owned enterprises. The SBV made tremendous improvements in non-cash payment and acceleration of payment performance with almost enterprises and state entities. It also focused on managing and expanding the foreign exchange mobilization to serve for the country rehabilitation. During this period, Vietnam Construction Bank and Vietnam Bank for Foreign Trade were also established. By the end of 1964, the SBV had cooperative relations with 265 banks from 41 countries around the world.

During 1965 – 1975, the US extended the fierce war in the South into North Vietnam. Due to these hostilities, the SBV had to redirect its activities to adapt to the wartime conditions. In order to meet requirements for production, livelihood, and fighting the war, the SBV improved and expanded its credit, payment, cash management relationships; managed state budget funds; helped enterprises relocate, disperse, and increase their production; promoted bank credit for state-owned and collective enterprises; mobilized foreign currency revenues and ensured smooth international payments. Non-cash payments in this period averaged 85.5% of all transactions.

In order to receive and transport foreign exchange grants from international friends for the South Vietnam battlefields, the SBV established a special unit on payments within the Foreign Exchange Department - the Vietnam Bank for Foreign Trade, which was coded B29 or “Special Fund”. In the South, a Special Financial Department coded D270, N2683 were also established under the Central Party of South Vietnam to receive aids from the Central Party and to store money for a long resistance.

In 1968, the requirement of urgent spending for the South front including finance and cash increased enormously. Implementing the Politburo’s instruction, the SBV assigned a delegation of banking officials known as B-68 to serve the South front. B– 68 delegation was assigned in to 14 groups located from the Province of Binh Tri Thien to the southern provinces. Among them, the group of officials working for the Central Party of South Vietnam coordinated with local officers to establish Treasure and Credit Council R namely C32. The C 32 was a part of Special Financial and economic Department operated under the leadership of the Central Party of South Vietnam. The group of C32 officers were the silent comrades acting in a confidential, dangerous, difficult and lacking conditions, but they were extreme loyal (the faithful), clever, brave, creative and exceptionally fulfilled the task of receiving and transporting foreign exchange, ensured safety for thousands of USD million to timely serve for South battles and effectively took over the banking system of the former Saigon regime after the liberation of Saigon. The “Special Fund” – B29, Special Financial Departments coded D270, N2683 were awarded the title of Hero of the people's armed forces for their special and exceptional contribution.

Financial and monetary developments in 1976 – 1985

After the Great 1975 Spring Victory, Vietnam entered a new era: the era of peace, independence, unity, and transformation to socialism. To restore the society and develop the economy after the war, the Party and the Government set many guidelines and policies. The banking sector had quickly taken over and renovated the banking system of the old regime in the South, built the new banking system of the revolutionary government, and unified the currency nationwide. It also issued and implemented many monetary, credit, payment and foreign exchange policies to stabilize the economy and the money in circulation, to provide funds for production, defense, security, and socio-economic programs, and extended international cooperation, based on international support for the rehabilitation of the country.

In order to eliminate the currency of the Southern regime and unify the national currency, the Politburo decided to issue the Vietnam Dong in the South in exchange for the Saigon regime notes. This exchange took place from September 22 to September 30, 1975 at the rate of 500 of the former Saigon regime notes for 1 Vietnam Dong. After the exchange, Vietnam formed two currency zones with the notes in the North issued by the SBV and the notes in the South issued by the Vietnam National Bank of the Interim Revolutionary Government of the Republic South Vietnam. Both notes were paper notes issued by the SBV for the socialist construction nationwide.

Implementing directive of the Council of Government under Decision No. 32/CP dated February 11, 1977 on the credit renovation and expansion, the SBV General Director issued the Credit Guideline on working capital and Provisions for infrastructure investment lending for state-owned enterprises. The credit entered to a new stage of growth and expansion of various types of lending, beginning with state-owned enterprises. The establishment of a nationwide unified payment system helped unclog payment delays between businesses, organizations. International credit and payment relations with socialist countries were strengthened. In May 1977, the SBV joined the International Investment Bank (MIB), and the Bank of International Economic Cooperation (MBES).

To unify the currency nationwide, on April 1, 1978, the Politburo issued Resolution No. 08/NQ-TW on the issuance of new currency notes and the revocation of the old currencies. On May 5, 1978, the SBV issued new notes, and collected all the old notes nationwide.

During 1981 – 1985, production and commerce faced many difficulties. Implement ting the Politburo’s Resolution No. 26/NQTW dated June 23, 1980 and the Decisions of the Council of Government, the SBV promulgated provisions and regulations on monetary, credit, payment activities for capital investment, and foreign exchange. It also implemented "positive credit policies, taking credit as the battle front" to open up new types of lending to meet the demand for capital and cash to support economic recovery and commerce, to raise living standards and stabilize prices.

The currency exchange in September 1985 was an important economic policy of the Party and the State pertaining to the circulation and distribution. It was also a part of the Price - Salary – Currency overall adjustment plan aiming at stabilizing VND purchasing power, and for the socialist development and renovation.

Banking activities 1986 to present

The comprehensive and radical reform set forth in the Resolutions of Party Congress VI and thereafter promoted the country innovation and gradually moved the economy from centralized planning to a socialist-oriented-market economy under State management, step by step integrating into the international economy.

After a trial period of conducting socialist-oriented commercial banking activities, on March 26, 1988 the Council of Government issued Decree No. 53/HDBT laying the foundation to "transform the banking system to commercial operations”. The organization of the State Bank was consolidated to manage the monetary, credit, functions of credit institutions for the State. In addition four specialized banks were separated from the SBV namely the Industrial and Commercial Bank of Vietnam, the Agricultural Development Bank, the Bank for Investment and Construction of Vietnam, and the Bank for Foreign Trade of Vietnam. These banks implemented specific lending and banking services on behalf of the State, In May 1990, the State approved two Banking Ordinances. The banking system entered into a period of strong comprehensive transition in accordance with guidelines of the Party and State.

In May 1990, the State approved two Banking Ordinances. The banking system entered into a period of strong comprehensive transition in accordance with guidelines of the Party and State.

From 1990 – 1996, the SBV adopted a positive interest rate policy as well as tools to manage monetary policy, establish money markets, modernize its technology, and enhance its human resources to regulate the new banking system. During these years, the banking system extended credit to all economic sectors. The growth of credit averaged 36% per year, contributing to the success of restructuring towards industrialization and modernization, while promoting economic growth over many years. In this period, the relationship between Vietnam and international financial and monetary institutions (IMF, WB, and ADB) was resumed.

In 1997, the National Assembly approved the Law of the State Bank of Vietnam and the Law on Credit Institutions forming the basic legal foundation for the banking system to continue its transformation toward a market-orientation and further international integration.

The SBV continued to implement its monetary policy flexibly, which helped to mitigate the harm of the Asian financial crisis in 1997. The SBV continued to improve its conduct of monetary policy, especially its management of interest rates. The system of credit institutions was reorganized and consolidated, gradually eliminating its outstanding debts and improving its financial capacity. Banking technology also developed as the inter-bank electronic payment system officially began operation in May, 2002 and e-banking services appeared (E-Banking, Internet Banking. etc.). The SBV participated in World Trade Organization negotiations and actively implemented its commitments for the international integration of its banking sector.

After the official accession to the World Trade Organization (late 2006), banking performance continued to obtained significant renovation in the governance and management, institutional framework and technology. The Law on the State Bank of Vietnam and the Law on Credit Institution passed by the National Assembly of the Socialist republic of Vietnam, at 7th session, XIIth Legislature on June, 2010, have created legal foundation for continued innovation of banking activities to meet the international integration requirement.

Facing the financial crisis and global economic slump in 2008, in order to implement the Resolutions of the National Assembly and the Government to restore growth with low rates of inflation, the SBV adjusted its priorities to address the prevailing conditions: to cut the high rate of inflation in 2008, to contain the economic downturn in 2009, to restore growth in 2010 and 2011, and to achieve macroeconomic stability while supporting growth in 2012. Especially, from 2011 up to present, the SBV regulation of monetary policy has changed in a fundamental manner with a proactive ability to lead the market and obtained significant achievements as follows: The monetary policy is managed in an active and flexible manner in close coordination with the fiscal policy to control inflation, stabilize macro- economy, support economic growth at a reasonable level. The foreign exchange rates are stable; the interest rates of existing loans continue to be cut down in the coordination with effective credit policies contributing to easing difficulties for enterprises and boosting domestic business and production. The state international reserves significantly increase, the money and forex markets have been closely managed and operated stably, and the goldization and dollarization have been eliminated.

Implementing Resolution of the Party Central Committee Session XI on changing the model of economic growth, restructuring the economy, the SBV formulated and submitted to the Government the Scheme of restructuring credit institutions period 2011 – 2015 and the Scheme on non performing loan resolution. These two Schemes have been approved by the Government under Decision No. 254/QD-TTg dated March 1, 2012 and Decision No 843/QĐ-TTg dated May 31, 2013 of the Prime minister.

The Scheme of restructuring credit institutions and NPL resolution has been implemented by the whole banking industry in active and decisive manner in accordance with the set orientation and roadmap and has basically obtained the defined objectives such as strict control of weak credit institutions; gradual improvement of the limitations and weaknesses of the banking sector; NPL control and effective resolution; maintaining the banking sector growth and making significant contribution to stabilizing macro-economy, lessening difficulties for production and business, and supporting the market and promoting economic development.

To acknowledge the remarkable contributions of the banking sector to the cause of nation construction, protection and development over the last 60 years, the Communist Party and the Government have awarded the banking system the Gold Star Order, the highest award of the nation in 2006; the Ho Chi Minh Order in 1996 and 2011. Three collectives namely B29 or “Special Fund”, Special Financial Departments coded D270, N2683 were awarded the title of Hero of the People's Armed Forces for their special and exceptional contribution, and several other collectives and individuals serving in the banking system have been bestowed with noble titles such as “Hero of Labour” titles, orders and certificates of merit of different levels.

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