Central bank urged to cut reserve requirements to boost stocks

Sunday, May 25, 2008
The State Bank of Viet Nam (SBV) should reduce reserve requirements for banks to help stabilize the stock market, the Viet Nam Association of Financial Investors said.

Reserve requirements for commercial banks should be cut to 8% of deposits from 11% at present, the association said in a statement on its website.

The reduction will raise the supply of funds in banks, it added.

“Investors will be more ready to join the stock market then,’’ Nguyen Hoang Hai, general secretary of the association, said in a telephone interview Friday.

Vietnam’s benchmark stock index has fallen 50% this year.

Bank lending rose 14.7% in the first four months, according to the central bank, reaching almost half the 30% cap that the central bank imposed to rein in credit growth and tame inflation.

The investors association represents members such as fund managers and brokers, and its board includes former government officials. (Bloomberg)