Vietnam makes big leap in non-dollarization — TalkVietnam

Vietnam vows to reduce the foreign currency deposit ratio to 15 percent by 2015 and stop the dollarization by 2020.

According to the International Monetary Fund (IMF), an economy is listed as the dollarized economy when the foreign currency deposit ratio in it accounts for 30 percent or more of the total money supply,

As such, Vietnam has been listed as unofficial dollarized economy. This means that though the dollar is not considered a legal currency in circulation in Vietnam, people still make transactions with dollars and keep dollars as their assets.
A report showed that in 2000-2003, the foreign currency deposits accounted for 28-30 percent of the total money supply. The ratio sometimes reached 32 percent.
According to Dr. Le Xuan Nghia, Head of the Business Development Institute, the State Bank kicked off the program on fighting against the dollarization in 2011, striving to stop the dollarization by 2020.
The first thing the State Bank did was raising the required compulsory reserve ratio for foreign currency deposits, which aimed to enlarge the gap between the local currency and foreign currency deposit and lending interest rates.
This has forced commercial banks to lower deposit interest rates and raise the lending interest rates in the dollar. As a result, the dollar has become no longer attractive in the eyes of people.
Having realized that it is not profitable to keep dollars, people and businesses tend to convert their dollar into dong. Meanwhile, commercial banks have also found it more profitable to lend in dong than in the dollar.
The State Bank has also released the decisions aiming to reduce the foreign currency positions of commercial banks, lowered the ceiling foreign currency deposit interest rates. Especially, it has requested state owned enterprises to sell 100 percent of the foreign currencies they earn from exports to commercial banks.
The comprehensive measures taken by the State Bank have brought satisfactory achievements. The foreign currency deposits had decreased from 19.5 percent in 2011 to 14.6 percent of the total mobilized capital, while the foreign currency deposits ratio on the total money supply had decreased from 15.84 percent to 12.36 percent.
The ratio of outstanding loans in foreign currencies had dropped from 20 percent to 17.5 percent of the total outstanding loans.
By the end of August 2013, the ratio of foreign currency deposits on the total money supply had reduced further to 11.82 percent. Commercial banks and businesses, which were the foreign currency lenders and borrowers, have become the sellers and buyers. This has helped reduce the foreign currency outstanding loans to 11.5 percent, while the dong outstanding loans had increased by 10.4 percent over 2012.
The dollarization reduction has helped put the foreign currency market under the State Bank’s control.
The State Bank once had to devaluate the dong sharply by 9.3 percent on February 2011. However, over the last two years, the dong/dollar exchange rate has been stabilized at VND20,828 per dollar, while the trading band has been staying firmly at one percent (the buy and sale prices quoted by commercial banks could be 1 percent higher or lower than the interbank exchange rate announced by the State Bank).
Kim Chi

Vietnamese parents now tend to award children with money | Look At Vietnam

Vietnamese parents now tend to award children with money

April 13, 2012

LookAtVietnam – A debate has been raised by VietNamNet’s readers about
whether to give money to children to reward for children’s efforts.

A lot of Vietnamese parents nowadays believe that giving money to children is
the best way to ask the children to do the things they want.
When asking the son, a 3rd grader, to go to the shop near his home to buy a pack
of cigarettes, Kien in Hoai Duc district in Hanoi, said: “Go and buy. I will
give you 5000 dong.”
The boy immediately left for the cigarette shop, without any words. 5000 dong is
the sum of money he always receives after fulfill a thing as requested by the
parents. Therefore, he believes that paying money is a must when someone is
served.
When asked why Kien promised to give the boy 5000 dong, Kien smiled and said
that if he had not offered the “award,” the boy would not have left for buying
cigarettes for him. As such, Kien now can earn his money by providing services
to his father.
Hue, a mother in Thanh Tri district, also thinks that it would be better to
encourage children with money. Every time when her child cries or refuses meals,
she would promise to give the child money.
“My child suffers from the anorexia. Therefore, I have to promise to give her
2000 dong to persuade him to eat meat,” she said. “Sometimes I have to give 5000
dong.”
When asked if this is a good way to use money to educate children, Vietnamese
parents all have a common voice that this should not be an education method.
Surprisingly, both Kien and Hue do not agree to the education method. However,
they still use the way every day to seek their wishes fulfilled.
Educators have warned the parents who try to use money to educate children that
the cash bonus would “harm” the children. They would always bargain with parents
about the sums of money the parents need to give them when asking them to do
something. Especially, they would not understand the value of the money, and
that their parents can only earn money from sweated labor.
Ha, the man in Quoc Oai district in Hanoi, related that one day, she asked a
niece to go buying a pack of cards for the guests to play after the family
party. As the niece said she did not want to go under the sun, Ha gave 2000 dong
to the girl, saying that this is the award for her.
However, to Ha’s surprise, the girl did not accept the “gift.” “You cannot buy
anything with 2000 dong now,” the girl said. Finally, she only left for the pack
of cards after Ha gave her a 5000 dong bank note.
“Instead of using money to stimulate children, why don’t parents think of
bringing the kids to the parks or buying the toys they like?” Huong, a parent
whose child goes to the Song Phuong Primary School questioned.
In the eyes of international labor managers, Vietnamese people keep a
combination of odd features: they are both frugal and squandered.
While the students in 1990s were told that money would associate with crimes,
the students in the 21st century believe that everything can be bought with
money, while they would not go to school if the parents to not give them money.
Nowadays, in many families, money is given to children when they fulfill normal
duties such as doing home exercises, cleaning rooms, washing dishes or taking
care for younger brothers.
Nguyen Hien

Taiwan police arrest man for throwing banknotes on highway -

Taipei - Taiwan police on Sunday arrested a man for throwing banknotes from a taxi on the highway.

Chen Ping-teng, 43, was arrested after he tossed 1,000 Taiwan dollar (30 US dollar) bills from the window of a taxi on a highway in central Taiwan.

The taxi driver, suspecting Chen was the same man who threw money from a taxi on the highway Tuesday, causing traffic jams and triggering a police probe, drove Chen to a police station and handed him over to police.

During police questioning, Chen - who seemed to be mentally disturbed - admitted he has thrown an unknown amount of money across the island several times, including throwing 500,000 Taiwan dollars in 1,000 Taiwan dollar bill on the highway Tuesday.

Taiwan press gave wide coverage of Tuesday's incident as some drivers, seeing Chen throwing money out of the taxi, pulled over to the road side to pick up the money, posing a hazard to other cars.

Chen said he has made 4 million Taiwan dollars from selling an apartment and wanted to give away part of it because he has been possessed by ghost and cannot sleep at night.

Police found 920,000 Taiwan dollars in 1,000 Taiwan dollar bills in two dark plastic bags Chen was holding. The edge of some bills have been burnt.

Police turned Chen over for prosecution on charges of destroying national currency and disrupting traffic.