New circular on foreign currency transactions with credit institutions

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On 31 December 2021, the Governor of the State Bank of Vietnam (SBV) issued Circular No. 26/2021/TT-NHNN guiding foreign currency transactions between the SBV and credit institutions licensed to conduct foreign exchange operations.

This Circular only regulates the foreign currency transactions between the SBV and the credit institutions. The foreign currency transactions between the SBV and the credit institutions in the domestic market are aimed to support the foreign currency interventions in line with the plan decided by the SBV from time to time.

The new Circular is aimed to firstly, simplify the dossiers of establishing foreign currency trading relationships, providing more specific guidance on the transaction processes; secondly, supplement the forex options trading as a type of transaction; and thirdly, make amendments to ensure consistency with the changes in the use of London Interbank Offered Rate (LIBOR) in the financial market.

The credit institutions licensed to conduct foreign exchange operations willing to establish foreign currency transaction relationships with the SBV shall submit dossiers for registration of the establishment of foreign currency transactions to the SBV in accordance with regulations. The SBV shall confirm the establishment of foreign currency transaction relationship with the licensed credit institution on the basis of checking the completeness and accuracy of the dossiers. The Circular abolishes the requirement for a copy of the license and other documents proving that the relevant credit institution is permitted to provide foreign exchange services in the domestic market.

The Circular provides for more specific guidance on the transaction process and the forms by which the credit institutions can send transaction confirmation after telephone transactions and submit foreign currency transaction requests to the SBV. The Circular also stipulates the means and language of the transactions, time and payment, suspension and cancellation of transaction relationships; the means of reporting; responsibilities of the licensed credit institutions and units under the SBV.

Licensed credit institutions that have established foreign exchange transactions with the SBV before the effective date of this Circular may continue to conduct foreign currency transactions with the SBV in accordance with the provisions in this Circular, and shall not need to reregister with the SBV.

Circular No. 26/2021/TT-NHNN will take effect on 15 February 2022.