Nghị định 50/2014/ND-CP

Decree No. 50/2014/ND-CP dated May 20, 2014, management of state foreign exchange reserves

Nội dung toàn văn Decree No. 50/2014/ND-CP management of state foreign exchange reserves


THE GOVERNMENT
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SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
---------------

No.: 50/2014/ND-CP

Hanoi, May 20, 2014

 

DECREE

MANAGEMENT OF STATE FOREIGN EXCHANGE RESERVES

Pursuant to the Law on organization of Government dated December 25, 2001;

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Ordinance on Foreign Exchange dated December 13, 2005 and the Ordinance amending and supplementing a number of articles of the Ordinance on Foreign Exchange dated March 18, 2013;

At the request of the Governor of the State Bank of Vietnam,

The Government issues the Decree on management of State foreign exchange reserves;

Chapter 1.

GENERAL PROVISION

Article 1. Scope

This Decree regulates the State foreign exchange reserves, management of State foreign exchange reserve, accounting record, report and publication of information about State foreign exchange reserves;

Article 2. State foreign exchange reserve management agency

The State Bank of Vietnam (hereinafter referred to as the State Bank) is the organ managing the State foreign exchange reserves in accordance with the provisions of this Decree and the provisions of relevant laws.

Article 3. Explanation of terms

In this Decree, the terms below are construed as follows:

1. State foreign exchange reserves are the assets in foreign exchange shown in the monetary balance sheet of the State Bank including:

a) Official State foreign reserves (hereinafter referred to as the official foreign exchange reserves) is the part of the assets in foreign exchange owned by the State and assigned to the State Bank by the Government for direct management;

b) Deposit in foreign currencies and gold of credit institutions, branches of foreign banks (hereafter referred to as credit institution) and the State Treasury deposited at the State Bank;

c) Other sources of foreign exchange;

2. Official foreign exchange reserves include the foreign exchange reserve Fund and the exchange rate stabilization and gold market management Fund.

3. Preservation of State foreign exchange reserves is to ensure the safety of State foreign exchange reserves through the compliance with the structure, criteria and investment quota of State foreign exchange reserves approved;

4. Liquidity of foreign exchange reserves is the capacity for availability of foreign currency and gold to meet the objectives of managing the national monetary policies, the exchange rate and gold, foreign exchange market intervention to ensure the international liquidity and meet the unexpected and urgent demand for foreign exchange of the State;

5. Profitability is positive difference between the total incomes minus the investment expenses of official foreign exchange reserves in the fiscal year.

6. Investment in the State foreign exchange reserves is that the State Bank sends, buys and sells foreign currencies and gold; buys and sells securities and other valuable papers in foreign currencies; trusts investment and carries out other forms of investment on international market stipulated by the Governor of State Bank in each period;

7. Structure of investment in official foreign exchange reserves including the ratio of foreign currencies and volume of gold; ratio of short-term, medium-term and long-term investment; ratio of deposits in foreign currencies, securities, valuable papers and other forms of investment in official foreign exchange reserves and the maximum foreign currency level to buy gold on international market of the exchange rate stabilization and gold market management Fund stipulated by the Governor of State Bank in each period;

8. Investment criteria of state foreign exchange reserves including: credit rating level of partners allowed for investment in the State foreign exchange reserves, types of securities, valuable paper allowed for investment in the State foreign exchange reserves stipulated by the Governor of State Bank in each period;

9. Investment quota of State foreign exchange reserves is a maximum level of foreign exchange allowed to make partnership investment and the form of investment is stipulated by the Governor of the State Bank in each period.

10. Domestic market intervention is that the State Bank buys, sells or swaps foreign currencies and gold and carries out other forms of intervention in domestic market.

Article 4. Components of State foreign exchange reserves

1. Foreign currencies, cash and deposits in foreign currencies abroad;

2. Securities and other valuable papers in foreign currencies issued by the Government, foreign or international institutes;

3. Special capital or reserve withdrawal rights at the International Monetary Fund.

4. Gold managed by the State Bank

5. Other types of State foreign exchange;

Article 5. Sources of State foreign exchange reserves

1. Foreign exchange purchased from the State budget and foreign exchange market;

2. Foreign exchange from loans of banks and international financial institutions.

3. Foreign exchange from deposits in foreign currencies of the State Treasury and credits institutions;

4. Foreign exchange purchased from the profitability from the investment in state foreign exchange reserves.

5. Foreign exchange from other sources;

Article 6. Structure, criteria and investment quota of State foreign exchange reserves

1. The State Bank regulates the structure, criteria and investment quota of State foreign exchange reserves, including:

a) Regulations on criteria and quota of investment applicable to the State foreign exchange reserves;

b) Regulations on investment structure applicable to the official foreign exchange reserves, including the investment of the foreign exchange reserve Fund and the investment structure of the exchange rate stabilization and gold market management Fund.

2. Grounds for development of investment structure of foreign exchange reserve Fund:

a) Trend towards fluctuation of exchange rate, interest and gold price on international market;

b) Situation of investment in types of foreign currency and gold in international reserves of the countries in the world according to the International Monetary Fund.

3. Grounds for development of structure of investment of the exchange rate stabilization and gold market management Fund.

a) Objectives of monetary policies and exchange rate and gold policies;

b) Situation of fluctuation of exchange rate and gold price on domestic and international foreign exchange market;

c) Situation of use of foreign currencies in payment of imports of goods and services and repayment of foreign debts of Vietnam;

d) Quota of foreign exchange of the exchange rate stabilization and gold market management Fund approved by the Prime Minister in each period;

4. Grounds for development of criteria and quota of investment:

a) Scale of State foreign exchange reserves;

b) Forecast of situation of international financial markets and domestic foreign exchange market;

c) Rating system of prestigious credit rating organizations in the world.

5. Every 6 months, and when necessary, the Governor of the State Bank shall decide to approve the structure, criteria and investment quota of State foreign exchange reserves and make a report to the Prime Minister and the Ministry of Finance for coordination;

Article 7. Foreign currencies allowed for investment in foreign exchange reserves

Foreign currencies allowed for investment in State foreign exchange reserves are freely convertible foreign currencies and other foreign currencies committed in the bilateral or multi-lateral currency swap agreements signed by the Central Banks and international financial institutions;

Article 8. Inspection of management of State foreign exchange reserves

Annually, the Ministry of Finance shall inspect the management of State foreign exchange reserves of the State Bank under the provisions in this Decree;

Chapter 2.

OFFICIAL MANAGEMENT OF FOREIGN EXCHANGE RESERVES

Section 1: GENERAL PROVISION

Article 9. Principles of official management of foreign exchange reserves

Official management of foreign exchange reserves must ensure the following principles:

1. Preservation

2. Liquidity

3. Profitability

Article 10. Operations of official management of foreign exchange reserves

The State Bank carries out the official management of foreign exchange reserves through the following operations:

1. Investment on international market;

2. Intervention in domestic market;

3. Implementation of operations of foreign exchange derivatives;

4. Implementation of bilateral or multi-lateral currency swap agreements with the Central Banks and international financial institutions;

5. Other operations of official management of foreign exchange reserves shall be decided by the Governor of the State Bank in each period;

Article 11. Purchase and sale of foreign currencies between official foreign exchange reserves and the State budget

1. The Ministry of Finance is responsible for deposit all of the foreign currencies of the State Treasury at the State Bank;

2. Annually, the Ministry of Finance shall submit the foreign currency quota which shall be retained with permission for regular expenditure of the State budget. On the basis of foreign currency quota retained with the permission of the Prime Minister, the Ministry of Finance shall sell all of the remaining foreign currencies for supplementation of official foreign exchange reserves;

3. Annually, no later than March 31, the Ministry of Finance shall give a written notice to the State Bank of the detailed plan for quarterly sale of foreign currencies for supplementation of official foreign exchange reserves;

4. Where the State Bank may not balance its foreign currencies for repayment of foreign debts of the Government and other demands for expenditure of foreign currencies of the State budget, the Ministry of Finance shall coordinate with the State Bank to prepare plans for balancing the sale of foreign currencies to the State budget;

Article 12. Import, export and gold conversion

1. Based on the structure, criteria and investment quota of State foreign exchange reserves and the need for intervention in the domestic gold market in each period, the Governor of State Bank shall make a decision on import and export of gold with international standard, other gold of State foreign exchange reserves from gold with international standard to other gold and vice versa;

2. Criteria for selecting partners for export, import and conversion of gold shall be decided by the Governor of the State Bank in each period.

Section 2: MANAGEMENT OF FOREIGN EXCHANGE RESERVES

Article 13. Scope of using foreign exchange reserve Fund

The using foreign exchange reserve Fund is used for:

1. Investment on international market

2. Implementation of operations of foreign exchange derivatives;

3. Implementation of bilateral or multi-lateral currency swap agreements with the Central Banks and international financial institutions;

4. Transfer and swap of foreign exchange with the exchange rate stabilization and gold market management Fund;

5. Use of foreign exchange to meet the unexpected and urgent demand for foreign exchange of the State;

Article 14. Swap of foreign exchange of foreign exchange reserve Fund with the exchange rate stabilization and gold market management Fund

The Governor of State Bank shall make a decision on the swap of foreign exchange between the foreign exchange reserve Fund and the exchange rate stabilization and gold market management Fund in order to ensure the compliance with structure of investment approved of the foreign exchange reserve Fund and the exchange rate stabilization and gold market management Fund without changing the balance of these two Funds from the conversion to US dollar at the time of swap;

Article 15. Use of foreign exchange reserve Fund for unexpected and urgent demand for foreign exchange of the State

1. The Ministry of Finance shall coordinate with the State Bank to request the Prime Minister to make a decision on the use of foreign exchange from the foreign exchange Fund for the unexpected and urgent demand for foreign exchange of the State. In case of using foreign exchange for advance and loan, the Ministry of Finance is responsible for the recovery and reimbursement under the Prime Minister’s decision and regulations of law;

In case of using foreign exchange from the foreign exchange reserve Fund leading to the change of estimate of State budget, the provisions of the Law on State Budget shall be applied;

2. Based on Decision of the Prime Minister and request of the Ministry of Finance, the Governor of the State Bank issues the decision on using foreign exchange from the foreign exchange reserve Fund;

Section 3: MANAGEMENT OF THE EXCHANGE RATE STABILIZATION AND GOLD MARKET MANAGEMENT FUND

Article 16. Scope of using the exchange rate stabilization and gold market management Fund

The exchange rate stabilization and gold market management Fund is used for:

1. Intervention in domestic market of foreign currencies and gold;

2. Investment on international market, except for activities of investment trust;

3. Implementation of operations of foreign exchange derivatives;

4. Transfer and swap of foreign exchange with the foreign exchange reserve Fund

5. Sale or advance of foreign currencies for foreign exchange demands arising from the operations and management of the State Bank;

6. Sale of foreign currencies to the State budget under the plan for balance of foreign currencies approved;

Article 17. Foreign exchange quota of the exchange rate stabilization and gold market management Fund and the transfer between the exchange rate stabilization and gold market management Fund and the foreign exchange reserve Fund

1. The foreign exchange quota of the exchange rate stabilization and gold market management Fund shall be decided by the Prime Minister in each period;

2. Based on the foreign exchange quota of the exchange rate stabilization and gold market management Fund approved by the Prime Minister and the situation of foreign currencies and gold in the country, the Governor of State Bank shall decide the maximum level of foreign currencies to purchase gold in the international market of the exchange rate stabilization and gold market management Fund in each period;

3. The Governor of State Bank shall decide the transfer of foreign exchange from the exchange rate stabilization and gold market management Fund to the foreign exchange reserve Fund when the balance of the exchange rate stabilization and gold market management Fund exceeds the quota approved by the Prime Minister;

4. Where the balance of foreign exchange of the exchange rate stabilization and gold market management Fund does not meet requirements of domestic market interventions, the Governor of the State Bank shall request the Prime Minister to allow the transfer of foreign exchange from the foreign exchange reserve Fund to does not meet requirements of domestic market interventions, the Governor of the State Bank the Prime Minister to allow transfer of foreign exchange from foreign exchange reserve Fund to the exchange rate stabilization and gold market management Fund.

Article 18. Intervention in domestic market

1. Based on the objectives and national monetary policies and the fluctuation of exchange rate and gold price on domestic market, the State Bank shall develop the mechanism to intervene in the domestic market in each period.

2. The Governor of State Bank shall decide the plan for intervention, including:

a) Time of intervention;

b) Type and amount of foreign currency and volume of gold for intervention;

c) Exchange rate and gold price for intervention;

d) Form of intervention includes: sale, purchase and swap of foreign currencies and gold;

dd) Partner implementing the interventions;

e) Conversion from gold with international standard to other gold and vice versa when necessary;

g) Other relevant contents;

3. The Governor of State Bank shall request the Prime Minister to approve the other forms of intervention in addition to the ones specified at Point d, Clause 2 of this Article;

Article 19. Sale and purchase of gold on international market for intervention in domestic market

1. Based on the structure, criteria and quota of investment of the exchange rate stabilization and gold market management Fund and gold demand for intervention in each period, volume of gold used for intervention and requirements for national security, the Governor of State Bank shall decide the sale and purchase of gold in international market for the intervention on domestic gold market;

2. Criteria for selecting partners to buy and sell gold on international market for intervention in domestic market shall be decided by the Governor of State Bank in each period;

Chapter 3.

MANAGEMENT OF DEPOSITS IN FOREIGN CURRENCIES AND GOLD OF THE STATE TREASURY, CREDIT INSTITUTIONS AND OTHER SOURCES OF FOREIGN EXCHANGE

Article 20. Principles of management of deposits in foreign currencies and gold of the state treasury, credit institutions and other sources of foreign exchange

The State Bank manages the deposits in foreign currencies and gold of the state treasury, credit institutions and other sources of foreign exchange must ensure the following principles:

1. Ensuring the safety through the compliance of criteria and investment quota of State foreign exchange reserves;

2. Promptly meeting the demand for foreign exchange of the State Treasury and credit institutions when necessary;

3. Liquidity.

Article 21. Operation of management of deposits in foreign currencies and gold of the state treasury, credit institutions and other sources of foreign exchange

The State Bank shall manage the deposits in foreign currencies and gold of the state treasury, credit institutions and other sources of foreign exchange through the following operations:

1. Investment on international market.

2. Cash in the fund or treasury.

3. Other management operations shall be decided by the Governor of State Bank in each period.

Chapter 4.

ACCOUNTING RECORD, REPORT AND PUBLICATION OF INFORMATION

Article 22. Accounting record

1. The State foreign exchanfe reserves shall be recorded in the original currency and Vietnam dong as provided for by law.

The State Bank shall re-evaluate the State foreign exchanfe reserves on the balance sheet of the State Bank to monitor the increase or decrease in the value of the State foreign exchange reserves in Vietnam dong to reflect the fluctuation of exchange rate and the gold price on domestic and international market.

2. Income and expenses incurred during the management of State foreign exchange reserves are recorded in the income and expenses of banking operations of the State Bank as provided for by law. The income and expenses incurred upon sale and purchase of gold on international market for intervention in domestic market, export, import and swap of gold and other activities of intervention in domestic foreign exchange market are the income and expenses in service of objectives to manage the monetary policies and exchange rate and gold policies;

Article 23. Regulation on report

1. Every 06 months, the State Bank shall report to the Prime Minister on developments, scale and situation of using the State foreign exchange reserves while submitting it to the Ministry of Finance;

2. Every year and when necessary, the State Bank shall report to the Prime Minister on the management of State foreign exchange reserves and forecast of State foreign exchange reserves and quota of the exchange rate stabilization and gold market management Fund for the subsequent year while submitting it to the Ministry of Finance;

Article 24. Publication of information on State foreign exchange reserves

1. The State Bank shall publicize information about the State foreign exchange reserves as stipulated by law;

2. The State foreign exchange reserves are converted into US dollar for statistics, management information and data publication. The State Bank shall determine the exchange rate and gold price to convert all foreign currencies of State foreign exchange reserves into US dollars;

Chapter 5.

IMPLEMENTATION PROVISION

Article 25. Effect

1. This Decree takes effect on July 15, 2014;

2. This Decree supersedes Decree No. 86/1999/ND-CP dated August 30, 1999 of the Government on management of State foreign exchange reserves;

Article 26. Responsibility for implementation

1. The State Bank is responsible for guiding and organizing the implementation of this Decree;

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, Chairman of People's Committees of provinces and centrally-affiliated cities and the organizations and individuals concerned are liable to execute this Decree. /.

 

 

 

FOR THE GOVERNMENT
PRIME MINISTER




Nguyen Tan Dung

 


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