Brian Jeffrey
According to Nguyen Quang Huy from the Finance and Banking Faculty at Nguyen Trai University, establishing a national gold trading platform would enhance transparency in Vietnam’s gold market and lessen the power held by a few dominant companies.
A trading exchange would facilitate standardized transactions, allow for proper recording, and enable regulatory oversight, which would help to deter speculation and the manipulation of prices.
Huy expressed that the lack of government oversight could lead to significant fluctuations in the gold market, potentially causing capital to flow out of banks and creating challenges in managing liquidity and interest rates. With the establishment of a gold exchange, the government would gain the ability to monitor transaction activity and interpret market behavior more effectively, allowing for more proactive adjustments to monetary policy and exchange rates.
“Implementing a modern gold exchange with transparent operational processes would bolster Vietnam’s entry into the global gold market and attract foreign investors and institutional capital. This is a strategic move that would enhance the nation’s financial commodity markets over time,” Huy remarked.
He further stated that such an exchange would shift public interest from holding physical gold to utilizing gold accounts and electronic trading, thus easing the burden of storage and security costs while also minimizing the reliance on foreign currencies in transactions, conserving national resources.
To create a successful national gold exchange, Huy recommended looking at the Shanghai Gold Exchange (SGE) as a prototype. This platform is state-supported yet driven by market dynamics and includes participation from major banks and gold firms.
“The government could enlist the State Bank of Vietnam (SBV) and the Vietnam Commodity Exchange to design the national gold exchange, integrating it with prominent commercial banks to facilitate liquidity and transaction regulation,” he suggested.
Moreover, it’s essential to maintain quality standards for gold and develop a network comprising banks, jewelry firms, and respected financial institutions. Furthermore, creating processes for transactions, payments, and deposits should lean towards electronic methods, minimizing the need for physical gold.
Using advanced technology is critical to ensure real-time processing of transactions along with accurate and secure data handling. A system for clearing transactions, deposits, and margin limits would be necessary to manage risk associated with price variability.
Huy also highlighted the importance of creating legal frameworks or regulations governing gold exchanges. The SBV and the Ministry of Finance (MOF) should establish mechanisms for ongoing monitoring and intervention when needed to prevent speculation and distortions in pricing.
Le Xuan Nghia, who serves on the National Financial and Monetary Policy Advisory Council and has formerly chaired the National Financial Supervisory Commission, recommended that Vietnam look to China’s approach, which includes both a physical gold exchange and a gold certificate trading system.
In China, approximately 13 to 14 major state-owned banks, selected foreign banks, and gold enterprises are authorized to import and sell gold through the physical exchange, which sets daily wholesale prices influenced by global market rates plus import duties. These wholesalers distribute gold to retailers, who sell to consumers.
Nghia suggested that Vietnam should start by setting up a physical gold trading platform for wholesale transactions, similar to China’s model, where wholesale buyers would supply retailers and small gold shops.
“Creating a wholesale physical gold exchange, akin to that of China, would address a variety of issues, including supply shortages, while aligning local prices with international standards. It would promote transparency, mitigate fraud and speculation, and allow the government to monitor gold inflows and the exit of dollars,” Nghia explained.
Huy stressed that in order to bridge the gap between local and international gold prices, Vietnam should consider permitting a limited number of large, trusted entities to import and manufacture gold bars, assessing the situation before further expansion.
“Reducing the control held by a handful of large firms in gold bar production and enabling reputable banks and businesses to engage in gold imports and trading—with appropriate oversight—would be beneficial,” he noted.
“Through a gold exchange, the listed prices could mirror true market demand, creating a reliable price standard while lessening monopolistic control by a few enterprises,” Huy advocated.
Additionally, the central bank could establish a national reserve of gold, similar to foreign currency reserves, to help stabilize prices during fluctuations. Promoting transactions in gold accounts instead of physical gold would reduce transaction costs, improve liquidity, and enhance price regulation.
In fact, the notion of a gold exchange was previously discussed by National Assembly members in late 2024 during an official assembly meeting.
Responding to this, SBV Governor Nguyen Thi Hong noted that developing a gold exchange would require significant investment in infrastructure, especially since Vietnam is not a gold-producing country like China.
Consequently, to sustain trading activities, Vietnam would have to rely on imports from international markets.
“Creating a gold exchange necessitates collaboration among the State Bank and various ministries to thoroughly examine and evaluate the implications, allowing for informed guidance to the government at an opportune moment, considering Vietnam’s specific conditions,” Hong stated.
