Dissertation abstracts: Liquidity management in monetary policy of the State Bank of Vietnam

Research will focus on the basic theory in terms of liquidity management of the central bank, the status of liquidity to execute the monetary policy of the central bank by forecasting method from currency balance sheet and propose management solution on liquidity of the central bank monetary policy.
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Dissertation abstracts: Liquidity management in monetary policy of the State Bank of Vietnam 1 EXECUTIVE SUMMARY1. THE NEEDS OF PROJECT Liquidity is available capital to meet the financial obligations of creditinstitutions (CIs) or banks. Capital is to meet the requirements of central bankreserves and compulsory excess to perform its payment obligations to customers,with the state budget, dealing with partners, pay debt to the central bank. The bankswill maintain liquidity in two forms: in the funds deposited at the central bank andcredit institutions. The excess liquidity is the highest portion of liquid, banks willdetermine the proportion of money kept in bank or deposited at the central bankbased on payment demand. Thus, the liquidity kept in the central bank include therequired reserve deposits and a part of excess reserves to meet the needs of payment.The central bank manages the deposited liquidity by setting the regulation and policysystem, building the rules of intervention, dominating the transaction volume ofliquidity in currency markets to adjust liquidity status in the interbank market,dominating the behavior of balance adjustment between deposited liquidity and fundin bank to ensure its proper operation, thereby affecting market interest rates in orderto achieve the ultimate goal of the monetary policy. To execute the liquidity management, central bank needs to forecast liquiditystatus in the market, determine the value needed to intervene and propose thesolutions to adjust liquidity status in the market to achieve the goal of monetarypolicy execution. Depending on the nation, with the characteristics of politicalinstitutions, the stage of economic development as well as the effectiveness inmonetary policy operation of central bank; the impact of each element that causes thesupply and demand of liquidity at the central bank as well as the prediction andcontrol of single component in central bank liquidity also differ. The State Bank of Vietnam is gradually improving the management of liquiditysuch as complete forecasting methods, provide sources of information for the forecastreports, improve uniformity of intervention system,...Despite many efforts, the resultsgradually are more accurate prediction, the tools are used flexibly, creating volatilityin line with market requirements and achieve the State Bank goals, but the result ofliquidity management of the central bank faces many constraints, liquidity status ofthe market reflects positive changes after the central bank intervened, directedinterest rate does not drive market interest rates, the operating activities of SBV goafter market, the market is not interested in the operating from the central bank.Causes affecting the results on liquidity management of State Bank of Vietnam is the 2lack of reporting system, forecasting techniques are short-term, predictable andmanagement on liquidity are limited, the coordination of macroeconomic policies isinconsistent ... leading the central bank in the passive state of liquidity adjustment toachieve the objectives of monetary policy. Starting from practical requirements outlined, this project have selected researchtopic is: Liquidity management in monetary policy of the State Bank of Vietnamcontributing more fully to the scientific arguments management of liquidity, practicalimplementation at the State Bank of Vietnam and then to propose solutions toimprove the efficiency of the management of liquidity in order to meet therequirements of operating monetary policy effectiveness.2. LOCAL AND GLOBAL RESEARCH Globally, there have been many studies related to the topic of monetary policy(the tools of monetary policy, the objective of monetary policy...), and money market.However the material directly related to liquidity management of central bank inmonetary policy execution in the world are not published much. The authorrepresents the study of this problem: Bindseil Ulrich (2000), Falko Fecht, Kjell G.Nyborg, Jorg Rocholl (2007), Simon T Gray (2008), Mohamed Afzal Norat (2008).In addition, organizations such as the International Monetary Fund (IMF), EuropeanCentral Bank and the U.S.Federal Reserve Board also has a number of research articlesrelated to the topic. In studies in Vietnam, the research topics related to monetarypolicy, the tools of monetary policy, the transmission channel of monetary policyaction has been much research interested, however, directly related to the operation ofthe executive liquidity management in the monetary policy of the central bank is onlyImproving prediction method to enhance Liquidity regulatory capacity of central bankin money market of Deputy Governor – SBV Nguyen Dong Tien (2006). Totally, in the world and in Vietnam, the ...