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| Not the right time to separate deposit insurance from SBV: lawyer |
| 03/Jul/2009 Intellasia | Dien Dan Doanh Nghiep |
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| 3 Jul, 2009 - 10:30:07 AM |
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In many countries regulating the deposit insurance is the function of insurance agencies while in Vietnam, State Bank of Vietnam is responsible for stabilising domestic currency and ensure the security of banking system.
Lawyer Truong Thanh Duc, chair of Basico law firm said that this is not the right time to separate deposit insurance from the Central Bank.
It is said that amended draft Law on SBV is still unclear on the independence of SBV in terms of role and responsibility. What do you think?
Currently, in many countries, central bank is independent of government. But in Vietnam, SBV is under the government and operates as a ministry. SBV governor is a governmental member as a minister. The new Law on SBV has no change in responsibilities and authorities of SBV and its governor.
With current capacity of securities companies, it is hard to meet all issue underwriting activities. However, in my opinion, discussing much on the issue is unnecessary. At present, SBV and the government still have to co-make big efforts to stabilise the value of domestic currency and the more important thing is to ensure the safety of banking operation.
The amended draft Law on SBV nearly does not have anything for National Financial Advisory Council. How is the role of the council different from SBV?
National Financial Advisory Council is a newly established agency. Under the Law on governmental Organisation, the agency is like a ministry. However, factually, this is only an advisor for the government in terms of financial, monetary issues in the context that the global financial crisis is affecting Vietnam. The council includes six functional offices equalling to one department.
I agree with the point of view that the government needs to build National Financial Advisory Council to be a ministry in charge of supervising operation of finance ministry and the Central Bank and then help the government for framing stronger policies The council this way will carry seasonal functions. If the crisis is over, the authority of National Financial Advisory Council could be narrowed again.
People proposed that there should separate role of SBV from the function of managing deposit insurance because the insurance interest is for depositors and need to be broken from SBV's authority scope.
Vietnamese insurers have not been yet able to manage deposit insurance and people's faith still is with SBV and the government. Banks must have SBV's and government's guarantee as raising capital from residents.
The underwriting on corporate bonds and securities is conducted by many commercial banks. But according to the draft, commercial banks do not cover the function whereas securities brokerages do. What is your comment?
Currently, commercial banks and securities companies all can underwrite issues of corporate bonds and shares.
Factually, banks are conducting well the corporate bond issue underwriting thanks to their financial strength. The rule on the issue underwriting needs to have a clear roadmap. The corporate bond issue of many corporations and state giants must be conducted by large sized banks.
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