Government urges to avoid ‘goldenizing’ the economy

The government has expressed concern over the “goldenization” of the economy, which could have a negative impact on the macroeconomy. In a Resolution dated June 5, the State Bank was tasked with finding immediate and long-term solutions to manage the gold market, ensuring stability, efficiency, and transparency. The Resolution emphasized the importance of preventing the economy from being overrun by gold and affecting macroeconomic stability.

The phenomenon of “goldenization” occurs when precious metals like gold overwhelm or replace domestic currency in the economy. Over a decade ago, this situation occurred, attracting investors and speculators alike. Gold became a popular choice for investment, with people frequently converting the value of objects into equivalent amounts of gold. In 2012, Decree 24 on gold business management was introduced to regulate supply and demand and stabilize the market.

In recent months, gold prices have fluctuated significantly, with a widening gap between domestic and world prices. This led to an increase in gold hoarding and investment, causing demand for the precious metal to rise sharply. To address this issue, the Government instructed the State Bank to sell gold at a stable price through state-owned banks and SJC. This move has helped reduce the price gap and stabilize the market.

Deputy Prime Minister Tran Hong Ha announced plans to amend Decree 24 to further stabilize the gold market and prevent the economy from becoming “yellowed.” The government also emphasized the importance of compliance with regulations on electronic invoices in gold transactions, with enforcement measures in place for non-compliant businesses. The Ministry of Finance and the State Bank are expected to increase oversight and implementation, with a deadline of June 15 for full compliance. Businesses failing to adhere to regulations risk having their licenses revoked.