Press release on issuance of Circular No. 26/2021/TT-NHNN
Hanoi, December 31, 2021 – The Governor of the State Bank of Vietnam (SBV) has issued Circular No. 26/2021/TT-NHNN providing guidance for the foreign currency transactions between the SBV and the credit institutions authorized to conduct foreign exchange operations.
The new Circular is composed of four (04) Chapters and twenty-two (22) Articles, and shall replace Circular No. 02/2012/TT-NHNN dated February 27, 2012 providing guidance for the foreign exchange transactions between the SBV and the credit institutions, the foreign bank branches (as amended and supplemented by Circular No. 27/2013/TT-NHNN dated December 5, 2013 and Circular No. 45/2014/TT-NHNN dated December 29, 2014). The new Circular is aimed to: (i) simplify the dossiers of establishing foreign currency trading relationships, providing more specific guidance on the transaction processes; (ii) supplement the forex options trading as a type of transaction and the related terms and terminology in order to ensure consistency with the other legal documents issued by the SBV; (iii) amend the substances to ensure consistency with the changes in the use of London Interbank Offered Rate (LIBOR) in the financial market.
Specifically, a number of substances that have been amended (as compared with Circular No. 02/2012/TT-NHNN) include:
1. Regarding the dossiers for establishing foreign currency trading relationships, the Circular has abolished the requirement for a copy of the License and other documents proving that the relevant credit institution is permitted to provide foreign exchange services in the domestic market.
2. The Circular also stipulates an additional type of forex options trading and the relevant terms and terminology; amends the regulations on the transaction terms to allow higher flexibility according to the announcement of the SBV in each intervention plan.
3. The Circular supplements more specific guidance for the transaction process and the forms by which the credit institutions can send transaction confirmations after telephone transactions and submit foreign currency transaction requests to the SBV.
4. The Circular shall replace the reference interest rate for the late payment penalty in foreign currencies to ensure consistency with the changes in the use of LIBOR in the financial market.
Authorized credit institutions that have established foreign exchange transaction relationships with the SBV before the effective date of this Circular may continue to conduct foreign currency transactions with the SBV in accordance with the provisions of this Circular, and shall not need to re-register with the SBV.
Circular No. 26/2021/TT-NHNN will take effect from February 15, 2022.
Translated by LK