Setting up gold exchange is necessary, yet takes time: economists

Vietnam needs to set up a national gold exchange to regulate the local gold market although it would take Vietnam from 3 to 5 years to build regulations and technical infrastructure system, the Thoi Bao Kinh Te Sai Gon reported, citing economists.

“Though not easy, it’s necessary to establish a centralized national gold exchange under the central bank’s control to meet the demand for gold transactions of local investors ”, said Le Xuan Nghia, Vice Chairman of the National Financial Supervisory Commission (NFSC).

Demand for gold in Vietnam has jumped as investors seek protection from a declining currency and inflation that has accelerated to the highest level in at least 20 months, said Bloomberg, citing that Vietnam consumes more gold per head than India, the biggest overall user.

The trading floor will discourage local investors to open gold trading account overseas that drain dollar flows out of the country; and help narrow the differences between local and global gold prices as supply-demand would be in check.

Le Tham Duong, Dean of Business Department at HCMC Banking University said the gold exchange will help the Government and the central bank regulate local gold market better, monitor transactions with large volumes and capital flows to the gold market.

An official gold exchange will also help reduce demand for physical gold hoarding, attracting gold from the public to the economy, Tran Thanh Hai, General Director of Vietnam Gold Business Company (VGB) added.

The Vietnam Gold Traders Association (VGTA) is now discussing with the State Bank of Vietnam (SBV), the NFSC to hold seminars on this issue.

However, one of issues left to debate is that commodity exchanges must be regulated by the Ministry of Industry and Trade (MoIT) while gold is a special commodity that needs the central bank’s regulation, the VGTA was concerned. – Stoxplus.com

Tags: Vietnam gold trading floor