Trang Chủ
Establishing the strategic vision for DI operations
The Law on DI (Law No. 06/2012/QH13) stipulates that the DI organization is responsible for developing the DI development strategy for the State Bank of Vietnam to submit to the Prime Minister for approval and implementation. The global and domestic economic contexts present both opportunities and challenges for the Vietnamese banking sector in general and the Deposit Insurance of Vietnam (DIV) in particular. In particular, the development trend of DI organizations worldwide requires the DIV to define its future direction to better align with the Core Principles for Effective Deposit Insurance Systems.
Therefore, the Strategy for DI Development to 2025, with orientation to 2030, issued by the Prime Minister at the end of 2022, is a crucial step to set clear directions for the implementation and accomplishment of DI operations. For the first time in nearly 25 years of implementing DI policies in Vietnam, viewpoints, objectives, tasks, and solutions for each future stage have been concretized in the medium and long-term vision, opening new prospects for this particular public policy field.
The DI development strategy outlines five persistent viewpoints in the DI development orientation so that (i) the DIV contributes to the stability of the financial and banking system in Vietnam, and the overall socioeconomic development of the country, (ii) the DIV persistently pursues the goal of protecting the legitimate rights and interests of depositors, maintaining the stability of the system of credit institutions and foreign bank branches, and ensuring the safe and sound development of banking operations; (iii) the role of the DIV should be strengthened in the process of restructuring weak insured institutions associated with resolving non-performing loans; (iv) the DIV would enhance the research and application of international standards to DI operations as well as related core activities of insured institutions. The DIV would progressively innovate to align with the Core Principles for Effective Deposit Insurance Systems of the International Association of Deposit Insurers and the overall orientations of the Development Strategy of Vietnam Banking Sector and best practices in Vietnam. (v) the DIV would promote the application of modern science and technology and innovative changes together with the development of high-quality human resources which are considered as key factors for the rapid and sustainable development of the DIV.
To implement the above viewpoints, the DI development strategy defines four groups of key tasks and solutions, including: accomplishing the legal framework for DI, effectively applying DI policy tools; efficiently implementing DI operations; and developing the DI organization system. Specifically, in the period of 2022-2025, the DI development strategy has identified the focal point of accomplishing the legal framework as amending and supplementing the Law on DI and related laws as well as developing guidance documents. In the period of 2025-2030, the process of developing, amending and supplementing legal documents to accomplish the legal framework for DI will continue to be carried out.
Legal framework - the breakthrough in the implementation of the Strategy
There is always an order of priority ranging from the overall to details, from macro to micro factors in all strategic activities. It can be said that one of the breakthroughs to effectively implement the DI Development Strategy to 2025, with orientation to 2030 issued by the Prime Minister, is the accomplishment of the legal framework. It is a wide spectrum of matters, covering all key issues of the DI organization as well as its core operations and support activities.
After 10 years of implementation, the Law on DI has revealed certain problems as well as potential limitations for the future development of the banking system. The Law on DI needs to be amended and supplemented in line with the real situation and international best practices to create a clear path for the effective implementation of DI policies. On the contrary, if the Law on DI is not amended and supplemented in a timely manner, it will hinder the efforts of protecting the legitimate rights and interests of depositors and ensuring the safe and sound development of banking operations.
For instance, the DI Development Strategy has set the objective of "enhancing the role of the DIV in participating in the restructuring process of weak insured institutions associated with resolving non-performing loans." However, the restructuring process will affect not only the DI organization but also credit institutions and regulatory agencies in the finance and banking sector. This objective can only be achieved by giving the DIV powers, duties, tools, and specific assignment and coordination mechanisms, which should be consistently regulated in laws, decrees, circulars as well as internal regulations of the DI organization. Without a legal framework, the DIV, despite its capability and willingness to undertake new tasks, lacks a defined pathway for efficient execution.
Therefore, the forthcoming amendment and supplementation of the Law on DI should be aimed to accomplish the legal framework in line with international practices, enhance the position and role of the DIV, address difficulties and challenges during the implementation of the Law on DI in recent years, and harmonize regulations with related laws such as the Law on amending and supplementing some articles of the Law on Credit Institutions, the Bankruptcy Law, etc.
At the same time, the DI Development Strategy should be utilized as a reference to propose specific provisions of the amended Law on DI, aiming to effectively implement the Strategy. The solutions and suggestions stated in the DI Development Strategy must be integrated into the amended Law on DI to ensure consistency in viewpoints, directions, and solutions. Consequently, the amended Law on DI will deepen and broaden the main viewpoints and directions outlined in the DI Development Strategy.
Lastly, when developing DI policies for the long-term vision, it is necessary to study, assess, and regulate new innovative contents to create flexible mechanisms for the DI organization to promptly respond to evolving situations. The consequences of the recent COVID-19 pandemic have brought about unpredictable changes to the banking and financial system and the global economy. The DI policies should anticipate solutions to cope with the "black swan" effects, helping the DIV effectively protect the legitimate rights and interests of depositors.
It can be said that the implementation of the DI Development Strategy and the amendment of the Law on DI are inherently interconnected, mutually affecting and impulsing each other. Therefore, there should be a close connection between the two processes. This is the critical phase for DI policies and the DI organization, aiming to effectively implement the DI Development Strategy and simultaneously accomplish the legal framework and DI policies, which will concretize the consistent viewpoint of the Government and the State Bank of Vietnam in protecting depositors and ensuring the safety and soundness of the banking system.
Tra Ly Research and International Cooperation Department (translation)
