The government has asked the central bank to figure out how it can encourage the public to stop hoarding gold and foreign currencies and instead put their idle cash into good use for the economy.
One of the potential measures is to set up a national trading floor for gold, which has been seen by many Vietnamese as a safe haven from inflation and economic uncertainties.
Such an idea is not new in Vietnam, where officials in recent years have been trying to find the best solutions to curb the public interest, if not obsession, in gold and to some extent in the U.S. dollar.
Last year, Nguyen Thanh Long, chairman of the Vietnam Gold Trading Association, proposed a gold floor, saying that it would help pull in an estimated 500 tons of gold from personal savings.
However, some economists have argued that creating an official gold trading floor could elevate the precious metal to the status of a currency and go against the central bank's efforts to shore up confidence in the local currency and monetary policies.
Gold and the greenback have been in favor in the country because most people don’t just see them as an investment but as savings to ensure their financial security, Nguyen Duc Do, deputy head of the Institute of Economics and Finance said in a interview with the Vietnam News Agency.
Nguyen Duc Thanh, head of the Vietnam Institute for Economic and Policy Research, warned that the plan to open a gold floor could backfire.
“We need policies to take gold and dollar out of circulation,” said Thanh.
When gold prices vary greatly between the domestic and global markets, it becomes extremely difficult for the central bank to regulate the exchange rate and implement monetary policies, he said.
Luu Bich Ho, former head of the Development Strategy Institute, who is not convinced either, said all the attempts to mobilize gold from the public would result in a volatile gold market.
“What the government should do is to carry out economic reforms and create a favorable business environment and to give people the freedom to make their own business decisions,” Ho said, adding that people buying gold reflects their lack of trust in the market.
“The proposal is just not feasible,” the economist said.
Commercial banks used to accept gold deposits and offered gold loans. But in 2010 and 2011, due to gold price fluctuations, this business failed to bear fruit. Then in 2012 the government tightened gold trading and also banned gold deposits at banks.
This is not the first time that Vietnamese authorities have called on the public to free up funds from gold.
In 2012, former central bank governor Cao Sy Kiem said the central bank should issue gold certificates as a way of attract gold from Vietnam.