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National gold exchange to be set up

In Uncategorized on January 8, 2011 at 4:25 am

Vietnam’s National Financial Supervisory Commission said it has asked the government to open an official gold exchange in 2011 to decrease the dependence of Vietnam’s economy on US dollars and restore order to the market of this precious metal.  Government officials will discuss a concrete plan for the setting up of the national exchange next week, said Le Xuan Nghia, vice chairperson of the commission.


 


He said in other countries, gold is kept in reserve centers, under the management of the central Bank. In Vietnam, the ratio of gold controlled by the ordinary people is very high. He added that the state bank should help to mobilize the capital in gold in the population, by acting as the largest controller of gold and the final buyer and seller in the gold market. “The establishment of the Gold Exchange will help investors trade in gold methodically under the risk control of the State. The exchange is also a place where managing agencies can supervise, regulate and intervene in the market,” said NFMC Vice Chairman Le Xuan Nghia.


 

Under the project, the State Bank of Vietnam will establish a joint stock company to monitor and manage the operation of the exchange and build a technical infrastructure system to manage gold trading activities. Investors will buy and sell gold under the form of certificates.  The exchange will operate like a stock exchange in both Ho Chi Minh City and Hanoi. Gold will be traded in the form of certificates.


 


The launch of the exchange will allow investors to invest in gold officially, and at the same time, help authorities manage the market, Nghia said. He also informed that the government should apply the mechanism of issuing bonds in gold, allowing commercial banks to carry out services of refunding and rediscounting gold. Besides, commercial banks can be permitted to reserve gold as a foreign currency.


 


Vietnam closed all 20 gold exchanges in the country from March. The central bank said the closure was necessary to eliminate risks posed to the national financial system. After the shutdown, however, some illegal trading floors for gold ‘popped up’. This was because many investors still wanted to trade gold using accounts despite the huge risks involved.


 


Many experts proposed that this project would help stabilize, manage and develop the gold market better, as well as promote the role of the capital source in economic development.


Before, the Bank for Investment and Development of Vietnam (BIDV) proposes this project to the Prime Minister, a national gold exchange Department should be set up.  The Gold Exchange, which will be a state funded organization, will ensure the equity in the market and avoid any unnecessary price increases that may damage our economy, said Nguyen Manh, Head of BIDV’s Capital and Capital Business Department.


 


 

Source: SGGP

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