of an order in their account and the seller must keep the required physical gold in their account. The buyer can resell the purchased gold on the same day and withdraw or transfer it the next day. The seller can use up to 90% of the same day sale proceeds in subsequent transactions. The unified gold traded is SJC gold bars.
An SGE account consists of two components, a margin account and a gold account, but they are essentially two parts of the same account, one part is the money in the account and the other part is physical gold. Any individual can open only one account to trade gold. In a margin account, the client holds the margin and the clearing margin.
Payment system: includes Payment through designated banks or Clearing Center. In which, Payment through designated banks performs the function: Establishing gold payment accounts, can take advantage of the infrastructure of regular payment accounts of banks to establish payments with members. Clearing Center: this is a part of the trading floor with the functions: clearing payments, managing payment accounts, and statistics of transactions on the floor. Clearing payments are carried out between units and member commercial banks.
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Gold quality standards: can be applied according to SGE regulations, gold accepted for trading on the floor is "standard" gold according to the standards including: gold produced from refining facilities designated by the State Bank; Acceptable weights are 50g, 100g, 1kg, 3kg, 12.5kg; purity is: 9999, 9995, 999, 995. Therefore, gold traded on the floor will be SJC gold bars with a minimum weight of 10 taels of gold. The listed price is VND/tael of gold.
Treasury system: build a centralized treasury system at the floor and at member units. At the same time, build regulations on the process and order of gold delivery and receipt.
Managing trading risks on the floor: Ensuring information is transparent, the number and volume of transactions are made public online; Developing regulations related to the volume of customer transactions; Requiring margin when trading to ensure payment capacity; Developing other regulations related to monitoring and risk zoning.
(ii) State management of gold trading floor activities. Through the practical operation of SGE floor, applying the model to Vietnam, specifically State management activities will include the following:
Monitoring and checking operations: Due to the synchronization, standards and concentration of the gold exchange, all information on the exchange will be highly transparent. Through
This allows investors to proactively grasp information, while the State Bank can easily and consistently manage, supervise, and inspect operations. At the same time, it is the basis for the State Bank to develop regulations on monitoring reports for the trading floor, thereby controlling activities on the floor.
Direct management: the exchange develops operating regulations and organizes staff under the direct management of the State Bank. The State Bank will decide on key staff of the exchange, assign full-time and part-time controllers to monitor the operation of the exchange. At the same time, the leadership of the exchange must regularly report on activities to the State Bank.
Regulating and orienting the market: The State Bank can regulate the market through two tools: one is indirectly through taxes and transaction fees; the other is direct administrative orders that are the subjects of participation and conditions of participation. Thereby adjusting the amount of capital in the market.
4.3. Some recommendations for State management agencies
4.3.1. Recommendations to the Government
- As a "General Engineer" of the economy, the Government needs to strengthen the unified direction of building a strategy for developing the gold market and State management of the gold market in the context of the overall socio-economic development orientation. The reason is that the gold market is an important part of the economy, and State management of the gold market is therefore carried out and coordinated by many management agencies and many different management fields. Therefore, when building a strategy for developing the gold market, the Government takes the lead in unifying and focusing on the overall strategy of the economy and related markets such as securities, real estate, ... with the participation of relevant ministries and branches such as: State Bank, Ministry of Finance, National Financial Supervision Commission, Ministry of Public Security, etc.
- Direct relevant ministries and branches to study and perfect policies to create a stable and transparent economic environment to create an open corridor for the gold market to develop according to the set orientation.
- Improve the overall forecasting capacity to serve as a basis for State management of the gold market. As pointed out in Chapter 1, gold prices have a special relationship with the macroeconomic and institutional environment, important geopolitical events. Therefore, to further improve the State management capacity of the gold market, the Government needs to build forecasts on the overall picture of the world and the country on issues: political economy, legal environment... to have accurate assessments to support
Gold market development strategy. In addition, early warnings are needed about potential shocks to the economy, causing spillover effects to markets including the gold market, in order to promptly develop response scenarios.
- Further investment in technical infrastructure, technology, and training of human resources for State management. These are considered fundamental conditions to help develop the gold market and strengthen State management work. Practice shows that a modern information technology platform is one of the key requirements in market management and supervision, especially for the gold market, which is a modern market with many advanced products with high information content. Human resources for State management are the decisive factor in the effectiveness of management. For human resources in the gold market, they need to be specialized and have good practices to excellently complete management tasks.
4.3.2. Recommendations to the State Bank
- The State Bank needs to further improve its capacity to manage monetary policy. State management of the gold market helps to stabilize the macro economy and the effectiveness of monetary policy, however, improving the capacity to manage monetary policy is an important condition to help enhance the role of the State Bank in regulating the market. Improving the capacity to manage monetary policy of the State Bank is demonstrated in two aspects: improving transparency, publicizing the responsibility for implementation and perfecting the method of managing monetary policy tools. In which, monetary policy tools need to be used flexibly and effectively by the State Bank based on scientific forecasts and assessments of the monetary market situation, gradually transforming the monetary control mechanism from direct to indirect.
- Enhance the independence of the State Bank in operating monetary policy, clearly define the long-term goal of monetary policy as stabilizing commodity prices and the value of the domestic currency, thereby the State Bank is completely proactive and flexible in choosing operational goals and intermediate goals of monetary policy in each specific period. However, the State Bank also needs to orient the development of a framework for operating monetary policy based on the specific conditions of Vietnam and at the same time refer to international experience.
- Improve the risk management capacity of the commercial banking system, strengthen the internal management of each commercial bank towards international standards. This is one of the important factors to help prevent risk factors to the management of monetary policy, at the same time, commercial banks are also the main subjects participating in the gold market, strengthening the management of commercial banks helps to improve the operational capacity of market subjects.
- Strengthen communication activities to enhance people's confidence in the value of domestic currency and the implementation of monetary policy of the State Bank. This is an important step to gain public consensus in completing monetary policy goals.
4.3.3. Recommendations to other organizations
- For the Ministry of Finance: it is necessary to have a tax policy for the State management of the gold market that is suitable and consistent with the goals of the State Bank in operating the gold market. At the same time, it is also necessary to refer to the tax policies of countries with similar conditions to Vietnam so that the tax policy ensures flexibility and harmonizes the interests of market participants.
- For the Vietnam Gold Trading Association (VGTA): it is necessary to further enhance the role of policy criticism, giving suggestions to the State management agency to clearly demonstrate the important bridging function between gold trading enterprises and the State management agency, thereby helping the State management policy to be increasingly improved in an effective and appropriate direction.
CONCLUSION OF CHAPTER 4
Based on the goal of developing the gold market and the viewpoints on perfecting the State management of the gold market, and based on the theory in chapter 1 and practical analysis in chapters 2 and 3, the thesis has proposed solutions to improve the effectiveness of State management of the gold market. The groups of solutions include:
- Completing the tasks and objectives of State management of the gold market in Vietnam
- Perfecting the organization of the State management apparatus for the gold market
- Perfecting policies and management tools for the gold market
- Group of solutions to stabilize the macro economy and the effectiveness of monetary policy
- Long-term solution groups to develop the gold market
These solutions, if applied flexibly, will contribute to promoting the development of the gold market according to the set goals, becoming an important investment channel for the economy.
CONCLUDE
Based on the collection, interpretation, demonstration and analysis of gold market data through scientific methods, the Thesis has completed the following contents:
The thesis has reviewed and systematized the theoretical basis of gold content, gold market, and State management policy for the gold market. Thereby, it focuses on in-depth analysis from the perspective of monetary policy management and macroeconomic stabilization to see the role of the State Bank in unifying the gold market management to limit negative impacts on the monetary and foreign exchange markets, and stabilize the macro economy.
The thesis is based on the management objectives of the State Bank of Vietnam with the gold market and uses the autocorrelation regression model (VAR) to evaluate the management measures implemented according to the roadmap of the State Bank of Vietnam.
Based on (i) Overview of the gold market structure, practical operations of the market, (ii) Lessons of State management of the gold market according to international experience to apply to the Vietnamese market, (iii) Assessment of the current state management status of the Vietnamese gold market according to the criteria established in Chapter 2, (iv) Results of the autocorrelation regression model (VAR) on the impact of the gold market management policy on macroeconomic variables. The thesis proposes a number of recommendations to improve the state management policy for the gold market in Vietnam, including: Improving the tasks and objectives of state management of the gold market in Vietnam; Improving the state management organization; Improving state management policies and tools; Group of solutions to stabilize the macro economy and effective monetary policy; Group of long-term solutions to develop the gold market. Thereby, some recommendations are made for state management agencies.
Throughout its development history, the gold market has been an important organic part of the financial market. Strictly controlling and orienting the gold market will have a positive impact on the foreign exchange market and the macroeconomic environment.
The thesis concludes that for different economic situations, there will be different goals for macroeconomic policies and appropriate monetary policies to develop the national economy. The gold market development policy needs to be linked to the general development context of the economy.
In the current conditions, tightly controlling the gold market to stabilize the macro economy and combating goldification by administrative measures is a necessary solution. However, when the economy is more stable, the State management of the gold market needs to follow
Following international practices, establishing a gold trading floor, strictly controlling the supply of smuggled gold, and at the same time, monetary policy needs to be more flexible to create a premise for the Vietnamese gold market to develop further.
The study still has certain limitations such as: First, choosing the domestic gold price variable as a representative of the State management policy for the gold market cannot fully cover the content of the policy variable. Second, the limitation of the time series, the State Bank's strengthening of control over the gold market does not fully reflect the content of the State management work for the Vietnamese gold market. Third, the author has only studied gold from the perspective of a financial asset but has not studied gold accounts and gold jewelry, these are very rich and diverse gold products, especially gold accounts currently occupying a very large trading volume in the world. This is a proposal for more in-depth research directions in the future.
LIST OF AUTHOR'S RESEARCH WORKS RELATED TO THE THESIS TOPIC
1. Pham Quang Trung, Tran Doan Khanh (2016), “Managing Vietnam’s gold market from Decree 24: Practice and policy recommendations”. Development Economics Journal, No. 11/2016
2. Nguyen Duc Trung, Tran Doan Khanh (2017), “Impact of Decree 24/2012/ND-CP on gold price and exchange rate in Vietnam” , Finance Magazine, No. 04/2017
3. Pham Quang Trung, Tran Doan Khanh (2014), “A Discussion on Gold market management in Viet Nam” , Innovation, Competitiveness and International Economic Cooperation