THE
STATE BANK
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
653/2001/QD-NHNN
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Hanoi,
May 17, 2001
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DECISION
ISSUING THE REGULATION ON ORGANIZING THE PERFORMANCE OF THE
TASKS OF MANAGING THE STATE’S FOREIGN EXCHANGE RESERVE
THE STATE BANK GOVERNOR
Pursuant to Vietnam State Bank Law
No.01/1997/QH10 of December 12, 1997;
Pursuant to the Government’s Decree No.15/CP of March 2, 1993 on the tasks, powers
and State management responsibilities of the ministries and ministerial-level
agencies;
Pursuant to the Government’s Decree No.86/1999/ND-CP of August 30, 1999 on
management of the State’s foreign exchange reserve;
At the proposal of the director of the Department for Foreign Exchange
Management,
DECIDES:
Article 1.- To issue
together with this Decision the Regulation on organizing the performance of the
tasks of managing the State’s foreign exchange reserve.
Article 2.- This
Decision takes effect 15 days after its signing and replaces the following
decisions of the State Bank Governor: Decision No.208/QD-NH7 of July 26, 1995
issuing the Regulation on the foreign currency fund management by the State
Bank; Decision No.216/QD-NH7 of August 7, 1995 issuing the Regulation on the
gold fund management and control by the State Bank; and the provisions related
to the management of the State’s foreign exchange reserve (the foreign exchange
reserve fund and the exchange rate and gold price stabilization fund) in the
Regulation on overseas foreign currency management by the State Bank, issued
together with Decision No.373/1999/QD-NHNN13 of October 20, 1999.
Article 3.- The
directors of the Office, the Department for Foreign Exchange Management, the
Monetary Policy Department, the Transaction Bureau, the Accountancy-Finance
Department, the General Control Department and the Department for Organization,
Personnel and Training as well as the heads of the concerned units of the State
Bank shall have to implement this Decision.
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STATE BANK GOVERNOR
Le Duc Thuy
REGULATION
ON ORGANIZING THE PERFORMANCE OF THE TASKS OF MANAGING
THE STATE’S FOREIGN EXCHANGE RESERVE
(Issued together with the State Bank Governor’s Decision No.
653/2001/QD-NHNN of May 17, 2001)
Chapter I
GENERAL PROVISIONS
Article 1.- Scope of
regulation
This Regulation provides for:
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2. A number of specific contents of the
Government’s Decree No.86/1999/ND-CP of August 30, 1999 regarding the
management of the State’s foreign exchange reserve.
Article 2.- Principles
for the management of the State’s foreign exchange reserve
1. Ensuring safety for the State’s foreign
exchange reserve in original currencies or precious metals, and cost-accounting
according to fiscal years;
2. Ensuring high liquidation for readiness to
satisfy the foreign exchange demands when necessary;
3. Earning profits through investment
operations.
Article 3.- The
foreign exchange reserve fund, the exchange rate and gold price stabilization
fund
The State’s foreign exchange reserve shall be
divided into two funds: the foreign exchange reserve fund and the exchange rate
and gold price stabilization fund.
1. The foreign exchange reserve fund is used to
ensure the international payment capability, to regulate foreign exchange
sources with the exchange rate and gold price stabilization fund when
necessary, to effect investment operations and make advances for the State
budget so as to meet the State’s urgent demands for foreign exchange under the
Prime Minister’s decisions.
2. The exchange rate and gold price
stabilization fund is used to intervene in the domestic foreign currency and
gold market with a view to stabilizing exchange rates and gold prices towards
the objectives of the monetary policies, to regulate foreign exchange sources
with the foreign exchange reserve fund when necessary and effect short-term
investment operations.
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The formulation and submission to the Prime
Minister for approval of the State’s annual estimated foreign exchange reserve
level shall comply with the following provisions:
1. Basis for formulation of the State’s annual
estimated foreign exchange reserve level:
a/ The situation on the payment balance
implementation and estimates for the plan year;
b/ The objectives of the monetary policies in
the plan year;
c/ The State’s minimum foreign exchange reserve
level necessary to ensure safety for international payment according to
international practices;
d/ The forecast on domestic exchange rates and
gold prices in the plan year and the foreign exchange amount necessary for
intervention in the domestic foreign exchange market.
2. The Department for Foreign Exchange
Management shall assume the prime responsibility and coordinate with the
Monetary Policy Department in estimating the State’s foreign exchange reserve
level for the plan year before submitting it to the Governor according to the
procedures prescribed in Clause 1, Article 19 of this Regulation for further
submission to the Prime Minister for approval.
Chapter II
MANAGEMENT OF ACTIVITIES
OF THE STATE’S FOREIGN EXCHANGE RESERVE INVESTMENT
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1. The State’s foreign exchange reserve shall be
invested through the following operations:
a/ Depositing foreign currencies and gold at
home and abroad;
b/ Buying and selling foreign currencies and
gold in foreign countries;
c/ Buying and selling bills of exchange,
debt-acknowledgement papers and/or debt securities in foreign currencies,
issued or underwritten by foreign governments, foreign banks, international
monetary organizations or banks.
2. The investment operations other than those
mentioned in Clause 1 of this Article, which are proposed by the Transaction
Bureau to the Governor for approval according to the procedures prescribed in
Clause 1, Article 19 of this Regulation, for submission to the Prime Minister.
Article 6.- Formulation
of criteria and limits for the State’s foreign exchange reserve investment
1. Once every 6 months or when necessary, the
Department for Foreign Exchange Management shall assume the prime
responsibility and coordinate with the Transaction Bureau in reevaluating the
previous criteria and limits for the State’s foreign exchange reserve
investment, formulating new criteria and limits and submitting them to the
Governor for decision according to the procedures prescribed in Clause 1,
Article 19 of this Regulation, with the following contents:
a/ Criteria for the selection of partnership organizations
for the State’s foreign exchange reserve investment;
b/ Foreign currency and gold limits for
investment in a partnership organization;
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d/ The proportions of investment in bills of
exchange, debt-acknowledgement papers and debt securities in foreign currencies
over the total amount of the State’s foreign exchange reserve.
2. The head of the Executive Board shall direct
the concerned functional departments and Transaction Bureau to organize the
application of the State’s foreign exchange reserve investment criteria and
limits under the State Bank Governor’s decisions.
Article 7.- Planning,
deciding and effecting the investment of the State’s foreign exchange reserve
1. The State’s foreign exchange reserve
investment plan shall be elaborated on the basis of:
a/ The structure of the foreign exchange reserve
fund and the structure of the exchange rate and gold price stabilization fund,
which have already been decided on;
b/ The criteria for selection of partnership
organizations for investment; the investment limit at a partnership
organization; the criteria for selection of bills of exchange,
debt-acknowledgement papers and debt securities in foreign currencies for the
State’s foreign exchange reserve investment; the proportions of investment in
bills of exchange, debt-acknowledgement papers and debt securities in foreign
currencies over the total amount of the State’s foreign exchange reserve, which
have already been decided by the Governor.
2. Once every 3 months or when necessary the
Transaction Bureau shall have to elaborate the State’s foreign exchange reserve
investment plan on the bases mentioned in Clause 1 of this Article and submit
it to the head of the Executive Board for decision.
3. Competence to decide on investment
a/ The director of the Transaction Bureau is
allowed to decide on the investment amounts valued at under USD 20,000,000
(twenty million US dollar);
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4. The Transaction Bureau shall have to organize
the implementation of investment plans; monitor the development in investment
activities so as to send monthly or extraordinary reports on market fluctuation
to the Governor, the head of the Executive Board and suggest new and
appropriate investment plans.
5. Once every 6 months or when necessary, the
Transaction Bureau shall have to evaluate the situation on implementation of
the investment criteria, limits and proportions mentioned in Article 6 of this
Regulation; coordinate with the Department for Foreign Exchange Management in formulating
and adjusting investment criteria, limits and proportions to suit the practical
situation, ensuring safety and efficiency in the investment process.
Chapter III
MANAGEMENT OF THE
FOREIGN EXCHANGE RESERVE FUND
Article 8.- Forming and
deciding structure of the foreign exchange reserve fund
1. Bases for the formation of structure of the
foreign exchange reserve fund:
a/ The percentages of foreign currencies used in
payment for Vietnam’s import and export of goods and services;
b/ The percentages of foreign currencies used in
Vietnam’s activities of borrowing and repaying foreign debts;
c/ The forecast on the domestic and overseas
trends of fluctuations of the reserved foreign currencies’ exchange rates and
gold prices;
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2. The foreign exchange reserve fund’s structure
is composed of the foreign currency and gold reserve rates; types of foreign currencies
and their percentages, as well as the short-, medium- and long-term investment
proportions.
3. Once every 6 months or when necessary, the
Department for Foreign Exchange Management shall assume the prime
responsibility and coordinate with the Transaction Bureau in evaluating the
existing reserve structure and forming new structure of the foreign exchange
reserve fund in conformity with the new situation and submit it to the Governor
for decision according to the procedures prescribed in Clause 1, Article 19 of
this Regulation.
4. In case of fluctuations on domestic and
overseas foreign exchange markets, the Transaction Bureau shall have to report
such to the head of the Executive Board and send a notice thereon to the
Department for Foreign Exchange Management for consideration and suggestion of
a plan for the restructure of the foreign exchange reserve fund, which shall be
submitted to the Governor for decision according to the procedures mentioned at
Clause 1, Article 19 of this Regulation.
5. The Governor shall decide or authorize the
head of the Executive Board to decide on the structure of the foreign exchange
reserve fund in each period.
Article 9.- Principles
for foreign exchange transfer
The transfer of foreign exchange from the foreign
exchange reserve fund to the exchange rate and gold price stabilization fund
shall comply with the following provisions:
1. In cases where the foreign exchange amount of
the exchange rate and gold price stabilization fund is not enough to meet the intervention
requirement, the Department for Foreign Exchange Management shall propose to
the Governor the transfer of foreign exchange from the foreign exchange reserve
fund to the exchange rate and gold price stabilization fund according to the
procedures mentioned in Clause 1, Article 19 of this Regulation, so that the
latter shall submit it to the Prime Minister for approval.
2. After obtaining the Prime Minister’s
approval, the Transaction Bureau shall effect the transfer of foreign exchange
from the foreign exchange reserve fund to the exchange rate and gold price
stabilization fund by the decision of the State Bank Governor.
Article 10.- Making
advances from the foreign exchange reserve fund for the State budget:
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1. The Department for Foreign Exchange
Management shall draft the State Bank Governor’s decision on making advances
from the foreign exchange reserve fund for the State budget and submit it to
the Governor for signing for promulgation when having all the following legal
bases:
a/ The Prime Minister’s decision on making
advances from the foreign exchange reserve fund for the State budget;
b/ The Finance Ministry’s official dispatch to
the State Bank, requesting the latter to make advances for the State budget.
2. The Transaction Bureau shall make advances
from the foreign exchange reserve fund for the State budget under the State
Bank Governor’s decision.
3. The Transaction Bureau shall account, monitor
and recover advances already made for the State budget.
Chapter IV
MANAGEMENT OF THE
EXCHANGE RATE AND GOLD PRICE STABILIZATION FUND
Article 11.- Forming
and deciding on the structure of the exchange rate and gold price stabilization
fund
1. Bases for the formation of the structure of
the exchange rate and gold price stabilization fund:
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b/ The forecast on fluctuations of domestic and
overseas gold prices;
c/ The foreign currencies to be used for
intervention.
2. The contents of the structure of the exchange
rate and gold price stabilization fund include: the foreign currency and gold
reserve rates, the percentages of material gold reserved in the country and
deposited overseas, the types and percentages of foreign currencies, the demand
and time (under 1 year) deposit rates.
3. Once every 6 months or when necessary, the
Department for Foreign Exchange Management shall form the structure of the
exchange rate and gold price stabilization fund and submit it to the head of
the Executive Board for decision.
Article 12.- Export,
import of international-standard gold
1. Based on the demand for intervention in the
domestic gold market, the national security requirements and the structure of
the exchange rate and gold price stabilization fund, the Department for Foreign
Exchange Management shall determine the volume of international-standard gold
to be exported or imported and submit it to the Governor for decision according
to the procedures mentioned in Clause 1, Article 19 of this Regulation.
2. The Transaction Bureau shall export or import
gold under the State Bank Governor’s decision and send reports on the implementation
situation to the Governor, and concurrently to the head and other members of
the Executive Board.
Article 13.-
Elaborating and implementing the plan for intervention in the foreign exchange
market
1. The State Bank shall intervene in the domestic
foreign exchange market through the following operations:
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b/ Selling foreign exchange for Vietnam dong.
2. Based on the fluctuations of domestic
exchange rates and gold prices, the objectives of the monetary and exchange
rate policies in each period, the Department for Foreign Exchange Management
shall propose an intervention plan on foreign exchange purchase or sale to the
head of the Executive Board.
3. The contents of the intervention plan on
foreign exchange purchase or sale include: The time for intervention, the type
of foreign currency used for intervention, the intervening exchange rate or
gold price, the amount of foreign currencies or gold used for intervention, the
intervention forms (spot, swap, forward and other forms of foreign exchange
transaction) and partner to effect the intervention.
4. The head of the Executive Board shall approve
the intervention plan before submitting it to the Governor for approval.
5. The Transaction Bureau shall carry out the
intervention plan and report to the State Bank Governor and the head of the
Executive Board thereon.
6. In case of fluctuations on the domestic and
overseas foreign exchange markets, the Transaction Bureau shall promptly notify
them to the head of the Executive Board and at the same time send the
Department for Foreign Exchange Management reports on the situation of foreign
exchange and gold supply and demand as well as developments on the market to
serve as basis for the management and suggestion of a plan for timely
intervention.
Article 14.- Operation
of inter-bank foreign currency market
1. The Transaction Bureau shall have to operate
the inter-bank foreign currency market; oversee the exchange rate changes as
well as supply and demand relations on the market so as to suggest the daily
purchase and sale of foreign currencies by the State Bank to the head of the
Executive Board for decision.
2. The Transaction Bureau shall have to notify
the Department for Foreign Exchange Management of the foreign currency amount
purchased or sold daily by the State Bank on the inter-bank foreign currency
market so that the latter shall make a report thereon and submit it to the
Governor for signing and further submission to the Prime Minister.
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By the 10th of the first month of every quarter at
the latest, when the exchange rate and gold price stabilization fund exceeds
the limit already approved by the Prime Minister, the Transaction Bureau shall
propose the transfer of the excessive foreign exchange reserve amount to the
foreign exchange reserve fund and effect such transfer once it is approved by
the head of the Executive Board.
Chapter V
COMPETENCE TO MANAGE THE
STATE’S FOREIGN EXCHANGE RESERVE
Article 16.- Contents
falling under the deciding competence of the Prime Minister:
1. The State’s annual estimated foreign exchange
reserve rate submitted by the State Bank Governor;
2. The foreign exchange limit of the exchange
rate and gold price stabilization fund;
3. The transfer of foreign exchange from the
foreign exchange reserve fund to the exchange rate and gold price stabilization
fund at the proposal of the State Bank Governor;
4. The advance from the foreign exchange reserve
fund for the State budget to meet the State’s unexpected and urgent demands as
submitted by the Minister of Finance;
5. The new forms and operations of the foreign
exchange reserve investment.
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1. Issuing decisions on making advances from the
foreign exchange reserve fund for the State budget under the Prime Minister’s
decisions;
2. Deciding on the export and import of
international-standard gold belonging to the State’s foreign exchange reserve;
3. Deciding on the plan on intervention in the
domestic foreign exchange market;
4. Deciding on the structure of the foreign
exchange reserve fund;
5. Deciding on the criteria and limit for the
State’s foreign exchange reserve investment;
6. Approving and signing for submission to the
competent authorities the reports mentioned in Clause 2, Article 21 of this
Regulation.
Article 18.- Contents
falling under the competence of the head of the Executive Board
1. Deciding on the structure of the exchange
rate and gold price stabilization fund;
2. Deciding on the structure of the foreign
exchange reserve fund in each period under the State Bank Governor’s
authorization;
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4. Deciding on the daily purchase and sale of
foreign currencies by the State Bank on the inter-bank foreign currency market
as stipulated in Article 14 of this Regulation.
5. Directing the concerned functional
departments and Transaction Bureau to organize the implementation of criteria and
limits for the State’s foreign exchange reserve investment under the State Bank
Governor’s decision;
6. Deciding on the transfer of foreign exchange
from the exchange rate and gold price stabilization fund to the foreign
exchange reserve fund in cases where the foreign exchange amount of the
exchange rate and gold price stabilization fund exceeds the limit already
decided by the Prime Minister.
Article 19.- Deciding
on the management of the State’s foreign exchange reserve
1. Regarding the contents falling under the
Governor’s approving or deciding competence:
The concerned functional departments and the
Transaction Bureau shall prepare contents according to their assigned tasks
prescribed in this Regulation and submit them, through the Executive Board, to
the Governor for approval or decision.
2. Regarding the contents falling under the
competence of the head of the Executive Board:
The concerned functional departments and the
Transaction Bureau shall prepare contents according to their assigned tasks and
submit them to the head of the Executive Board for decision.
Chapter VI
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Article 20.- Supply of
information
The supply of information in service of the
management of the State’s foreign exchange reserve shall be effected as
follows:
1. The Monetary Policy Department shall supply
the Department for Foreign Exchange Management with:
a/ By the 25th of the last month of every
quarter at the latest: The estimated data on the payment balance implementation
in the quarter and the estimates for the following quarter;
b/ By the last working day of the first month of
every quarter at the latest: The data and situation on the actual payment
balance implementation of the previous quarter, the monetary data of the entire
branch and the State Bank in the previous quarter;
c/ By November 20 of every year at the latest:
The estimated data on the payment balance implementation in the year, and the
estimates for the following year.
d/ By February 10 of every year at the latest:
The data and situation on the actual payment balance implementation in the
previous year, the monetary data of the entire branch and the State Bank in the
previous year.
2. The Transaction Bureau shall supply the
Department for Foreign Exchange Management, the Monetary Policy Department and
the General Control Department with:
a/ By the 5th of every month at the latest: The
previous month’s data on the foreign exchange reserve fund and the exchange
rate and gold price stabilization fund;
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3. By the 20th of the first month of every quarter
at the latest or when necessary, the Transaction Bureau shall supply the
Department for Foreign Exchange Management with the documents on the previous
quarter’s evaluation and grading of agency banks, including: the evaluation
documents of the Transaction Bureau (based on the evaluation criteria of
international credit grading companies such as Moody’s Investors, Standard and
Poor’s or International Bank Credit Agency- IBCA) and documents of the
above-mentioned international grading organizations.
4. The Department for Foreign Exchange
Management and Transaction Bureau shall supply the General Control Department
with necessary information on the State’s foreign exchange reserve according to
the requirements on internal control.
Article 21.- Reporting regime
1. The Department for Foreign Exchange
Management shall send to the Governor and the head of the Executive Board
(concurrently to the Monetary Policy Department, the General Control
Department) monthly, quarterly and annual reports on the situation of the
State’s foreign exchange reserve management and the estimates for the plan year
according to the following deadlines:
a/ By the 10th of the following month at the
latest, for monthly reports;
b/ By the 15th of the first month of the
following quarter, for quarterly reports;
c/ By January 25th of the following year, for
annual reports.
2. Annually or when necessary, the Department
for Foreign Exchange Management shall assume the prime responsibility and
coordinate with the Monetary Policy Department, the Transaction Bureau and the
Accountancy-Finance Department in elaborating and submitting the following
reports to the Governor for approval and further submission to the competent
authorities according to the procedures mentioned in Clause 1, Article 19 of
this Regulation:
a/ The report on the situation of the State’s
foreign exchange reserve management; the actual situation on the use of the
State’s foreign exchange reserve, to be submitted to the Prime Minister
(concurrently to the Finance Ministry);
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3. By February 15th of every year at the latest
or when requested, the State Bank shall have to submit to the Prime Minister
and the National Assembly Standing Committee the reports mentioned at Clause 2
of this Article.
Chapter VII
ORGANIZATION OF
IMPLEMENTATION
Article 22.- The
Executive Board for Management of the State’s Foreign Exchange Reserve
1. The State Bank Governor shall set up the
Executive Board for Management of the State’s Foreign Exchange Reserve,
consisting of 5 members: its head being a leader of the State Bank, the
director of the Department for Foreign Exchange Management, the director of the
Monetary Policy Department, the director of the Transaction Bureau and its
secretary.
2. The Executive Board functions to:
a/ Advise the State Bank Governor on the
contents prescribed in Articles 16 and 17 of this Regulation;
b/ Administer the performance of the State’s
foreign exchange reserve management tasks according to the State Bank
Governor’s stipulations.
3. The tasks and operation regulation of the
Executive Board shall be stipulated by the State Bank Governor.
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1. The Monetary Policy Department shall assume
the prime responsibility and coordinate with the concerned units in reporting
to the Governor the money amount supplied in each period for the objective of increasing
the State’s foreign exchange reserve.
2. The Accountancy-Finance Department shall have
to provide detailed guidance on cost-accounting of the State’s foreign exchange
reserve according to two funds, to be submitted to the Governor for decision.
3. The Transaction Bureau shall have the
responsibility to:
a/ Formulate the internal management principles
to organize the State’s foreign exchange reserve management according to the
provisions of this Regulation.
b/ Organize the cost- accounting of the arising
operations related to the State’s foreign exchange reserve according to the
State Bank Governor’s stipulations.
4. The Department for Organization, Personnel
and Training shall assume the prime responsibility and coordinate with the
Department for Foreign Exchange Management in drafting a decision to set up the
Executive Board for Management of the State’s Foreign Exchange Reserve and the
Board’s operation regulation, to be submitted to the State Bank Governor for
promulgation.
5. The Department for General Control shall
conduct regular or extraordinary inspection of the State’s foreign exchange
reserve management by the departments and Transaction Bureau according to their
assigned tasks and their observance of the provisions of the Government’s Decree
No.86/1999/ND-CP of August 30, 1999 on the State’s foreign exchange reserve
management and this Regulation.
Article 24.- The
amendment and supplement to this Regulation shall be decided by the State Bank
Governor.