Vietnam Central Bank Proposes Major Overhaul of FX Reserve Management Rules

HANOI – The State Bank of Vietnam (SBV) has put forward a draft decree proposing significant amendments to the management of the nation's foreign exchange reserves, aiming to introduce more flexible market intervention tools.

Central bank officials noted that while Decree 50/2014/NĐ-CP, implemented over a decade ago, established a crucial legal framework for managing reserves and enhancing monetary policy, recent volatility in the global economy and financial markets has highlighted the need for a more adaptable and practical mechanism.

The SBV stated that the country's foreign exchange reserves have served as a critical buffer for stabilising the currency market, supporting exchange rate management, controlling inflation, and bolstering investor confidence.

Vietnam’s reserves grew from US$34.3 billion at the end of 2014 to a record high of over $111.8 billion in January 2022. However, they subsequently declined to $86.7 billion by the end of 2022, influenced by the US Federal Reserve's aggressive interest rate hiking cycle, geopolitical tensions, fluctuating energy prices, and global economic uncertainty. As of June 18, 2026, the reserves stood at nearly $87.6 billion.

The proposed decree introduces several key amendments concerning the sources of foreign exchange reserves, investment principles, coordination with the Ministry of Finance, and market intervention instruments.

One significant proposal is the inclusion of Special Drawing Rights (SDRs) from the International Monetary Fund (IMF) as a formal source of state foreign exchange reserves. SDRs are international reserve assets allocated by the IMF to member countries to supplement their official reserves. Under the draft, the SBV would record the portion of SDRs allocated by the IMF into the state reserve fund, a move intended to clarify the management and accounting mechanism for this unique asset.

Furthermore, the SBV is seeking to enhance its coordination mechanism with the Ministry of Finance regarding the management of the state budget's foreign currency resources. The Ministry of Finance would continue to deposit the State Treasury's foreign currency at the SBV, with specific exceptions. It would be required to seek the Prime Minister's approval for the maximum amount of foreign currency it can retain to meet budget expenditures, with the remainder being used to supplement the state's foreign exchange reserves. The draft also introduces regulations for handling potential shortages of foreign currency in the state budget, clarifying the coordination process for balancing foreign currency among relevant agencies.

A notable change is proposed for the investment principles governing gold held in the country's reserves. The draft seeks to remove the principle of profit generation for gold investment activities. The SBV argues that gold, unlike bonds or other financial instruments, does not generate recurring income, with its value realised only through revaluation or sale.

Citing international practice, the central bank noted that gold is primarily held by central banks to diversify reserve portfolios, hedge against risks, ensure liquidity, and strengthen a nation's financial position, rather than for profit. Consequently, the SBV believes applying a profitability principle to gold is inappropriate and unfeasible. The proposed amendment would exclude income and expenses related to gold investment from the overall profitability assessment of official foreign exchange reserves.

The draft also proposes expanding the SBV’s toolkit for domestic market intervention by adding foreign currency and gold options. These would supplement the currently used instruments of buying, selling, and swapping operations.

According to the SBV, options would diversify intervention measures, increase operational flexibility, and improve the effectiveness of monetary policy. This is a tool commonly used by central banks globally to respond to unusual market fluctuations.

Finally, the proposal aims to grant the SBV Governor greater autonomy in deploying these tools. The current framework requires the establishment of intervention mechanisms on a periodic basis. The new draft stipulates that the Governor will decide on intervention measures when necessary, based on monetary policy objectives and developments in the foreign exchange, domestic gold, and Vietnamese đồng liquidity markets. This adjustment is designed to improve the central bank's ability to respond swiftly to rapid market changes.

The SBV said the amended decree is intended to further refine the legal framework for managing state foreign exchange reserves, improve the efficiency of their use, and enhance the central bank's proactiveness and flexibility amid complex and unpredictable global financial conditions.