Insights
AN HA
Rising to the challenge controlled at a level that is lower than the target of 4 percent as set by the National Assembly and the Government; the average inflation was about 2 percent, the lowest level since 2016. The core inflation was also at a low level, contributing to maintaining the macro-economic stability, strengthening public confidence, and FDI attraction.
The headquarters of the State Bank of Vietnam in Hanoi
The banking industry successfully fulfilled its tasks in 2021, yet many challenges remain ahead.
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ooking back over the past year, the banking industry had faced many difficulties and challenges in operating monetary policy given the unpredictable fluctuations of the world’s economy. Businesses and people were severely affected by the Covid-19 pandemic. The banking system had taken drastic actions, implementing tasks right from the beginning of the year, upholding its role as the lifeblood of the economy. In 2021, the State Bank of Vietnam (SBV) comprehensively managed the
monetary tools to regulate the liquidity appropriately; the money market has been stable; the inter-bank interest rates have been remained at low levels, supporting the credit institutions to reduce their capital costs, thereby allowing them to cut down their lending interest rates. Credit continued to focus on production, priority areas and policy credit programs. The SBV strictly controlled credit in potentially risky areas, implementing effective credit policy programs. The SBV also coordinated closely with the relevant ministries and state agencies to manage the monetary policies, the commodity and service prices; made forecasts of the inflation to control it. Thanks to those measures, the inflation in 2021 was
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B I D V r e vi e w
In addition, the State Bank flexibly adjusted the credit growth limits for credit institutions, ensuring sound credit expansion. With the SBV's uniform instructions and solutions, although negatively affected by the Covid-19 pandemic, the credit of the whole economy increased and was higher than the same period of the previous year. Total outstanding loans of the economy reached about VND10.38 quadrillion (USD457 billion), up 12.97 percent compared to the end of 2020 (total mobilized capital of the economy reached about VND11.23 quadrillion (USD495 billion), up 8.44 percent); 4 out of 5 priority areas had a higher growth rate than the credit growth of the economy. In the year, the SBV continued to maintain the policy rate at a low level, creating favorable conditions for credit institutions to access low-cost capital from the SBV which allowed them to further cut lending interest rates. The State Bank requested the credit institutions to cut expenses, adjust business plans and profit targets in order to focus on reducing their lending interest rates for the existing
