According to Law on the State Bank of Vietnam 2010, the SBV Governor decide on the use of tools for the implementation of the national monetary policy, including re-financing, interest rates, exchange rates, reserve requirements, open market operations and other tools and measures as stipulated by the Government.
- Re-financing:
Re-financing is a form of credit extension by the SBV, aiming to provide short-term loans and payment facilities for credit institutions. The SBV stipulates and performs the refinancing for credit institutions in the forms of granting valuable paper - mortgaged loans; discounting valuable papers; and other forms of re-financing.
- Interest rates:
The SBV shall announce re-financing interest rates, the base interest rates and other interest rates to implement the monetary policy, and to prevent high-interest lending. In the case of unexpected developments in money market, the SBV shall stipulate the mechanism for managing the interest rates applied in lending-borrowing relationship among credit institutions and with their customers, and other credit granting activities.
- Exchange rates: The exchange rates of VND shall be determined on the basis of foreign currencies supply and demand the State -regulated market. The SBV shall announce exchange rates, decide on exchange rate regime and the mechanism of regulating exchange rates.
- Reserve requirements:
Reserve requirements mean the amount of money that credit institutions must deposit at the SBV to serve the implementation of the national monetary policy. The SBV shall stipulate the ratio of reserve requirements for each type of credit institutions and each kind of deposits at credit institutions for the implementation of the national monetary policy. The SBV shall stipulate the payment of interest for reserve requirement deposits, and excess deposits applicable to each type of credit institutions for each kind of deposit.
- Open market operations:
The SBV shall perform open market operations through the purchase and sale of valuable papers with credit institutions; and shall stipulate types of valuable papers to be traded through open market operations.
