History of State Bank in Vietnam

Topics: Central bank, Bank, Monetary policy Pages: 10 (3614 words) Published: October 3, 2012
       The development of  the Vietnam banking system has closely linked with the national cause of revolution and construction. Before the August Revolution in 1945, Vietnam was a feudal-colonial country under the French colonialists’ rule. The banking and credit system was founded and protected by the French colonialists through the Indo China bank. Its functioned as both the central bank of the whole Indochinese region (Vietnam, Laos and Cambodia) and a commercial bank. The bank was an effective tool for the colonial policy of the French government and enriched the French capitalists. Thus, one of the key tasks of the August Revolution then, was to build an independent and autonomous monetary and banking system. The task was fulfilled by 1950, when the anti-French resistance war grew stronger, obtaining many triumphs in the battled field, and expanding the liberalized region. In this context, the development required economic and financial activities to be improved and promoted to meet new demands. On the basis of the new economic and financial policy set out in the 2nd Congress of the Vietnam Workers’ Party (February,1951), President Ho Chi Minh signed Decision 15/SL on the establishment of the Vietnam National Bank – Bank of the first people’s democratic state in Southeast Asia in order to carry out five urgent missions: issuing banknotes, managing treasury, carrying out credit policy in order to facilitate production and coordinating with the trade authorities for monetary management and struggling against the enemy. The foundation of the Vietnam National Bank was the result of the struggle process to develop an independent, and autonomous monetary and credit system, marking a new development step, i.e, changing the quality of the national monetary and credit sector. Pursuant to Circular 20/VP – TH issued by the General Director of Vietnam National Bank under authorization of the Prime Minister on January 21st ,1960, the Vietnam National Bank was renamed as the State Bank of Vietnam, in accordance with the 1946 Constitution of the Democratic Republic of Vietnam. Following the liberation of the South in 1975, the takeover of the Republic of Vietnam National Bank and private capitalist banks was a starting point of banking activities all over the country under the banking activity regime of a central planning economy. In July 1976, the country was officially unified and the Socialist Republic of Vietnam was founded. On the basis of important changes in the revolutionary directives and tasks as well as the functions, tasks and organizational structure of the State Bank of Vietnam, the development process of the Vietnam banking system could be divided into 4 periods as follows: 1. From 1951 to 1954: The Vietnam National Bank was founded and had relatively independent operations in the financial system, implementing the first important duties assigned by the Communist Party of Vietnam and the Government, i.e, issuing banknotes, retrieving poor quality banknotes, managing state treasury to help increase revenue and reduce expenditure, unifying fiscal management, developing banking credit to serve commodity production and circulation, and enhancing state – owned economic sector and fighting against the enemy in the monetary field. 2. From 1955 to 1975: The whole country launched the anti-American resistance war; the North carried out socialist construction and made great efforts to support the revolutionary liberation of the South; all socio-economic activities had to move along with new demands. In this period, the Vietnam National Bank carried out the following principal tasks: - Reinforce the money market, stabilize prices, contain inflation and create favourable conditions for the economic recovery. - Promote the provision of credit for food production, enhance the recovery and development of agriculture, industry and trade, thus contributing to the implementation of  the two...
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