Hanoi (VNA) - Convertingidle gold held by Vietnamese people into money and other assets may helpprovide more funding for socio-economic development and business operation,according to the State Bank of Vietnam (SBV).

The SBV said in a recent reportto the National Assembly that the conversion of idle gold into other assets mayhelp reduce the dependence of people on gold and lessen the amount of gold heldby people in the country.

Turning idle gold into otherassets will change the habit and demand of people regarding gold ownership,making gold less attractive and preventing the development of a gold-dominanteconomy, according to the SBV.

It is important for people tovoluntarily sell gold and switch to other assets so that they can avoid shocks,thus the country may be able to prevent a gold fever among its people.

It would take a long time tocomplete the conversion, and solutions for the issue must be carried outcomprehensively, carefully and synchronously, the SBV added.

The SBV has been studying andworking with other sectors and ministries to develop the plan on preventing agoldenised economy, as well as planning how to turn gold into resources for thecountry’s socio-economic development by 2020. In late 2017, the SBV submitted thedraft plan to the Prime Minister.

It is estimated that there arecurrently some 500 tonnes of idle gold held by people, worth billions of USD,which would be very useful if converted into money and other assets to investin the economy.

According to the SBV, commercialbanks in 2001-2008 were eligible to raise capital and make loans in gold. Thepolicy did help financial institutions raise a large amount of capital for thesocio-economic development with a stable gold price level.

However, as the world’s economyturned negative and unpredictable in 2008-2011, gold prices suffered frommassive volatility, increasing as much as 300 percent from 2008’s average pricelevel. As a result, gold traded in Vietnam also moved with high volatility,causing losses for both commercial banks and borrowers.

“As gold was used to raisecapital and make loans, the volatility caused a big burden for the Vietnameseeconomy, raising demand to capture and deposit gold at financial institutionsto earn high interests,” the SBV said.

“That worsened the condition ofthe market, increased the chance of gold dependency in the economy, causedvolatility for the gold trading market and dampened the Government’s efforts toadministrate its monetary policies during that period,” the SBV added.

In 2011-2013 period, the SBVimplemented a number of regulations to stop gold from being deposited and lent.Banks were only allowed to keep gold for customers and customers had to pay thebanks a fee for gold keeping.

According to the SBV, as gold wasforbidden from being borrowed and deposited, the demand for gold declined andmore people have switched to making cash deposits, thus increasing VND-dominatedaccounts in the system.

Since 2014, gold has become muchless attractive and the demand-supply leverage on the market has been quitebalanced. Gold trading has been on the downtrend and companies have mostlypurchased gold from individual clients.-VNA