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Gold exchange solution branded illegal (Vietnam)
The first proposed option, Option One, would see the State Bank of Vietnam (SBV) prohibit gold exchanges claiming they do not benefit society.
The second, Option Two would permit them to continue operations but would require participants to provide 100 percent collateral for loans instead of the current low percentage as currently required by gold trading floors. Only commercial banks would be allowed to run gold exchanges.
However, experts warn the prohibition would violate laws. Under Decree 59 launched in 2006, gold trading activities in general, and gold trading floors in particular, are not listed as goods and services subject to business prohibition or restriction.
Tran Quoc Quynh, a senior expert at the Vietnam Gold Business Council (VGBC), said both solutions proposed by the State Bank of Vietnam are unfeasible, and would lead to gold trading floors having to shut down.
Quynh said draft documents on the management of gold exchanges have been adjusted 11 times. However he says the compiling committee does not have sufficient knowledge about the operation of goldtrading floors, therefore, they still lack workable solutions to manage gold trading floors.
Cao Sy Kiem, Member of the National Advisory Council for Monetary Policies said:
“There are some 30 operational gold trading floors, including six to eight floors backed by commercial banks. Many gold trading floors have been reportedly operating in disorder that may cause high risks to investors. It is necessary to put gold exchanges under stricter control.
“However, I don’t think Vietnam should prohibit gold trading floors. Instead, we should only allow institutional investors to borrow gold with a high collateral level required in order to prevent risks. The collateral could be as high as 70 percent, for example.”
Pham Huy Duong, Deputy General Director of IGI gold trading floor said:
“It is unreasonable to prohibit gold trading floors which are not backed by commercial banks. Gold investors do not care if gold trading floors are backed by banks or not, the only thing they are interested in is whether the trading floors operate in a transparent way.
“It is not simple to just shut down gold trading floors. What would happen with gold investors’ accounts with billions of dong inside?”
VietNamNet/TP
