Laws of Vietnam

Article 1.- The State foreign exchange reserves are the assets under the State ownership indicated in the sheet of currency balance of the State Bank. The State Bank is the agency that manages the State foreign exchange reserves with a view to implementing the national monetary policy, ensuring the international payment capability and preserving the State foreign exchange reserves.

Article 2.- The State foreign exchange reserves include:

1. Foreign currencies in cash, foreign currency credit balance on overseas deposit accounts;

2. Bills and acknowledgments of foreign debts in foreign currency(ies);

3. Debt securities issued or guaranteed by the Government, foreign banks, international monetary organization or banks;

4. International standard gold;

5. Other kinds of foreign exchanges.

Article 3.- The State foreign exchange reserves are formulated from the following sources:

1. The existing foreign exchange under the State ownership and the management by the State Bank;

2. Foreign exchange bought from the State budget and from the domestic foreign currency and gold markets;

3. Foreign exchange from loans of foreign banks and international financial organizations;

4. Foreign exchange from other sources.

Article 4.- The State foreign exchange reserves are managed according to the principles:

1. Preserving the reserves;

2. Ensuring the capability to be ready to make payment and meet foreign exchange demands when necessary;

3. Generating profits through investment operations prescribed in Article 7 and Article 16 of this Decree.

Article 5.- The State foreign exchange reserves may set up two funds:

1. The foreign exchange reserves fund;

2. The exchange rate and gold price stabilization fund.

Article 6.- The foreign exchange reserves fund shall be used in the following cases:

1. Regulating the source of foreign exchanges for the exchange rate and gold price stabilization fund when necessary;

2. Performing investment operations prescribed in Article 7 of this Decree;

3. Making advances for the State budget to meet the State’s unexpected and urgent foreign exchange demands under the Prime Minister’s decisions.

Article 7.- The State Bank manages the foreign exchange reserves fund through the following investment operations:

1. Depositing, buying and/or selling foreign currency(ies) and gold overseas;

2. Buying, selling due bills and/or debit securities in foreign currencies;

3. Other forms of foreign exchange transactions, when permitted by the Prime Minister.

Article 8.- The State Bank Governor shall decide:

1. The foreign exchange reserves fund structure, including:

a) The rate of foreign currency and gold reserves;

b) Types of foreign currency and the ratios among them;

c) The ratio between short-term, medium-term and long-term investment.

2. Investment forms and terms.

3. The selection of partner organizations for implementation of investment.

Article 9.- The foreign exchange reserve fund structure shall be determined on the following basis:

1. The rates of foreign currencies used in payment for Vietnam’s export and/or import of goods and services;

2. The rates of foreign currencies borrowed from and paid to foreign countries by Vietnam.

3. Forecasts on the fluctuation tendency of each type of foreign currency and gold;

4. The rate of each type of foreign currency in international reserves and international payment of countries in the world.

Article 10.- Foreign currencies of the foreign exchange reserves fund must be the freely convertible foreign currencies. Gold of the foreign exchange reserves fund must be the international-standard gold.

Article 11.- The due bills and debit securities in foreign currencies of the foreign exchange reserves fund must be issued or guaranteed by the Government, foreign banks, monetary organization or prestigious international banks with high international prestige ratings.

Article 12.- Partner organizations selected for deposit of foreign currencies and gold and/or entrusted investment must be organizations with high international prestige ratings.

Article 13.- The exchange rate and gold price stabilization fund shall be used in the following cases:

1. Intervening the domestic foreign currency markets and gold markets;

2. Regulating the sources of foreign exchanges for the foreign exchange reserves fund, when necessary;

3. Performing the investment operations as prescribed in Article 16 of this Decree.

Article 14.- The foreign exchange level of the exchange rate and gold price stabilization fund shall be decided by the Prime Minister. In cases where the level of the exchange rate and gold price stabilization fund fails to meet the intervention requirements, the State Bank Governor shall report such to the Prime Minister asking for the latter’s permission to transfer foreign exchange from the foreign exchange reserves fund to the exchange rate and gold price stabilization fund.

Article 15.- The State Bank Governor shall decide:

1. The structure of the exchange rate and gold price stabilization fund, including:

a) The rate of foreign currency and gold reserves;

b) Types of foreign currency and the ratios among them.

2. The intervention in the domestic foreign currency and gold markets, when necessary, in order to achieve the objectives of the monetary policy in each period, including:

a) The time of intervention;

b) Type of intervention foreign currency;

c) Intervention exchange rates and gold prices;

d) Volume of intervention foreign currencies and gold;

e) Forms of intervention: prompt delivery, term intervention, exchange and other forms of foreign exchange transaction;

f) Partners for application of intervention form.

3. Foreign exchanges shall be transferred from the exchange rate and gold price stabilization fund to the foreign exchange reserves fund in cases where the foreign exchange level in the exchange rate and gold stabilization fund exceed the level already decided by the Prime Minister.

Article 16.- Basing him-/herself on the demand for foreign exchange from the exchange rate and gold price stabilization fund for intervention in each period, the State Bank Governor shall decide the use of the exchange rate and gold price stabilization fund for short-term investment on domestic and international monetary markets according to the provisions in Article 10, Article 11 and Article 12 of this Decree.

Article 17.- The Prime Minister shall decide:

1. The annual estimates of the State foreign exchange reserves level submitted by the State Bank Governor;

2. The advances from the foreign exchange reserves fund to the State budget in order to meet the State’s extraordinary and urgent demands submitted by the Minister of Finance;

3. The foreign exchange level of the exchange rate and gold price stabilization fund;

4. The transfer of foreign exchange from the foreign exchange reserves fund to the exchange rate and gold price stabilization fund at the request of the State Bank Governor.

Article 18.- Basing him-/herself on the objectives of the monetary policies and the situation of Vietnam’s international payment balance, the State Bank Governor shall annually make the State foreign exchange reserve estimate and submit it to the Prime Minister for approval and have to fulfill the tasks prescribed in Article 8, Article 15, Article 16, Article 20 and Article 21 of this Decree.

Article 19.- The Ministry of Finance shall have to:

1. Inspect the management of the State foreign exchange reserves by the State Bank according to its assigned function and tasks as well as the observance of the provisions of this Decree;

2. Submit to the Prime Minister for decision the advances from the foreign exchange reserves fund for the State budget in order to meet the State’s extraordinary and urgent demands;

3. Use and refund amounts advanced from the foreign exchange reserves fund by decisions of the Prime Minister.

Article 20.- Annually or when necessary, the State Bank shall have to:

1. Report to the Prime Minister on the situation of management of the State foreign exchange reserves; the situation of the actual use of the State foreign exchange reserves. These reports shall also be addressed to the Ministry of Finance;

2. Report to the Government and the National Assembly Standing Committee on the situation of fluctuation of the State foreign exchange reserves.

Article 21.- The State Bank shall have to organize the book accounting of the State foreign exchange reserves according to the provisions of law. The revenues and expenditures arising in the course of managing the State foreign exchange reserves shall be accounted into the revenues and expenditures of the banking operations of the State Bank.

1. This Decree takes effect 15 days after its signing.

2. Decision No. 105/CT of April 10, 1994 of the Chairman of the Council of Ministers on the establishment of the foreign currency regulation fund cease to be effective.

Article 23.- The State Bank Governor and the Finance Minister shall have to organize the implementation of this Decree.