Vietnam central bank tightens rules on gold bullion production

The State Bank of Vietnam (SBV), the country’s central bank, has issued a decision to update a sister rule issued in 2012, in a move to tighten the production of gold bullion amid recent volatility in the local market.

The new rules focus on participants and the SBV’s role in supervising gold bullion production. The SBV governor now delegates the head of the SBV’s Internal Audit Department to establish an SBV team to oversee the production of gold bullion from gold material.

The Ho Chi Minh City unit of the SBV’s Administration Department and the SBV’s Issue and Vault Department will pick personnel for the supervising team, subject to approval of the SBV’s Internal Audit department. The two agencies are also tasked with overseeing the production of SJC gold bullion from gold material of the SBV.

The SBV’s Internal Audit Department is responsible for building rules on overseeing SJC gold bullion production from gold material of the SBV, establishing the supervision team, and drafting inspection mechanisms for SJC gold bullion production from gold materials of the SBV.

The new decision comes after gold prices in Vietnam have gone wild over the past month, reaching a peak of VND80.35 million ($3,293) a tael late last month. Notably, the spread between domestic and global prices once widened to VND20 million a tael, and between buying and selling prices spiked to VND4 million a tael.

The SBV's Deputy Governor Dao Minh Tu said Wednesday that the banking regulator does not accept such disparities and will work to make gold prices more market-oriented.

Central bankers have hinted that the bank will amended Decree 24, which took effect in 2012 and aimed to stabilize the gold market and macroeconomic conditions.

The decree was meant to fight back “goldization” (a term that indicates a preference for keeping gold as a means of reserve to hedge inflation) and to stop gold from affecting the handling of inflation, forex flows and forex rates.

The decree granted SBV a monopoly on gold production and made Saigon Jewelry Company (SJC) the sole maker of SJC-branded bullion.