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INTRODUCTION Urgency of the topic Financial security is a part of national security Financial security stabilizes the macroeconomic environment and guarantees political stability and military security Crisis and financial insecurity can lead to political collapse Ensuring financial security is increasingly becoming an urgent issue for each country, especially in the context of modern market economy, integration, globalization, and economic-financial liberalization as fast and powerful as it is today In the market economy, the role of finance is like the economy's lifeblood, helping resources to be mobilized, allocated smoothly and efficiently, and is the basis to ensure the economic process reproduces at an individual and societal level However, only when financial security is ensured will the role of finance in the economy be promoted When the financial system is in crisis, it will lead to instability in many fields of economy, politics, society, security, and defense It may affect the sustainable development of the country If financial instability and financial crisis occur, the economy may be disturbed, and the damage to the economy is difficult to predict even at the micro level (households, businesses, financial institutions) and the macro level (growth, budget, national debt, etc.) The recent financial crises show that their impact is increasingly vital, taking place globally, and it takes a long time to recover the economy Therefore, financial security is an important driving force for the country's development However, this is also difficult, especially in a market economy Economic and financial activities take place extraordinarily diverse and complex Instability and crisis can arise from many areas of the economy and finance In Vietnam, the financial sector has just reached the initial stage of development of the market economy operation and integration process Financial institutions still have many shortcomings and weaknesses The ability to meet international standards on financial safety still needs to improve The financial market also has many potential risks The market size is small and easily affected by fluctuations in the international market The financial infrastructure in our country also has many things that could be improved The legal environment is still not synchronized, has not kept up with the development of the market, the level of information technology application is still low compared to many countries in the region and the world, and has not kept up with the requirements of the Government reality Manifestations of many of the weaknesses mentioned above over the past time have appeared a series of financial security holes such as the transfer of VND 30,000 billion to an unknown subject, manipulating the bond market, significant losses in the use of state budget related to Viet A company These are very urgent issues of financial security today Moreover, in the current context, practice is posing many urgent problems In the modern market economy context, economic and financial relations develop in the trend of increasing liberalization, and many complex problems arise; subjects run after interests and group interests Therefore, economic and financial activities are complicated to control If the financial system is not adjusted and perfected promptly so that it can be prevented and monitored, instability and crises are likely to occur In addition, international factors such as the development of science and technology, especially financial technology (Fintech), policy changes in major countries, and international financial institutions also make the increased risk of instability and financial crisis It poses many challenges for Vietnam in ensuring financial security For the above reasons, the author chooses the topic "Financial security in the context of Vietnam’s market economy" to research as the topic of the doctoral dissertation in economics, majoring in political economy Research purpose and tasks of the dissertation 2.1 Research purposes The purpose of the dissertation is to clarify the theoretical basis and practical experience on financial security in the market economy, thereby analyzing and assessing the current situation of financial security in the context of Vietnam's market economy and proposing solutions to ensure Vietnam's financial security by 2030 2.2 Research tasks First, reviewing published domestic and international research related to financial security in the context of the market economy clarifies the solved problems that can be inherited and developed, gaps need to be filled in theory as well as practice Second, building a theoretical framework on financial security in the context of the market economy: Clarifying the concept and the need to ensure financial security in the context of the market economy; Content, evaluation criteria, and factors affecting financial security; Studying experiences on ensuring financial security in some countries around the world and drawing lessons for Vietnam Third, analyze the current situation of financial security of Vietnam in the period 2011-2021 based on the theoretical framework built to point out the achieved results and limitations that need to be overcome in the coming time Fourth, propose views and solutions that are both urgent in the immediate future and fundamental in the long term to ensure Vietnam's financial security in the coming time Subject and scope of research 3.1 Research subject The research subject of the dissertation is "financial security in the context of the market economy." It includes ensuring an environment for financial relations to occur stably and healthily, allocating resources effectively and transparently, and meeting the economic actors' needs; improving the risk management and prevention capacity of regulatory agencies and financial institutions; forming and establishing mechanisms to absorb or withstand economic shocks 3.2 Scope of research - Scope of content: The dissertation studies financial security at the macro level as national financial security, it does not delve into the financial security of each specific financial sector and does not study in detail the contents, methods, and quantitative and technical indicators of finance to assess and analyze financial security developments Instead, the dissertation focuses on analyzing and clarifying the relationship between financial security and socio-economic development in the context of the market economy, Thereby identifying more clearly the beneficial relationships between stakeholders that may be involved in ensuring financial security to give appropriate views and solutions In particular, the dissertation focuses on three aspects: ensuring an environment for financial relations to occur stably and healthily, allocating resources effectively and transparently, and meeting the economic actors' needs; improving the risk management and prevention capacity of regulatory agencies and financial institutions; forming and establishing mechanisms to absorb or withstand economic shocks The illustrated figures focus on basic areas such as the economy's strength, financial markets, insurance markets, credit market, national budget, and national debt index - Scope of location: Dissertation on financial security research within the Vietnamese economy - Time range: The dissertation focuses on studying Vietnam’s financial security from 2011 to the present and orientation to 2030 Theoretical foundations, approaches, and research methods 4.1 Theoretical foundation and approach First, the dissertation uses the theoretical basis of Marxism-Leninism and Ho Chi Minh's thought, in which the theory focuses on the relationship between financial security and the stability of the production and reproduction process in the market economy Second, the dissertation inherits some views and theories of economists and reputable research organizations on financial security In particular, especially the IMF's studies on the framework of analysis and assessment of financial security, theoretical perspectives on the financial security of central banks, and domestic and foreign economists Third, the dissertation researches and thoroughly grasps the viewpoints, lines, and undertakings of the Party, policies, and laws of the State in finance and financial security 4.2 Research methodology Regarding methodology, the dissertation uses the dialectical and historical materialism of Marxism-Leninism in studying financial security in the market economy Regarding specific research methods, the thesis uses research methods of the political economy, including scientific abstraction, logically combined with history, systematization, analysis and synthesis, comparative methods, diagramming, charting to research to clarify the nature, content, and movement of the research object is financial security in the context of the market economy These specific methods are applied in accordance with the purposes, requirements, and tasks of each chapter and section New contributions of the dissertation Firstly, the dissertation builds a more explicit theoretical framework for financial security in the context of the market economy In particular, the dissertation clarifies the concept, necessity, content, and factors affecting financial security from the political economy perspective It provides a system of criteria for assessing financial security in the context of the market economy Secondly, the dissertation analyzes and objectively assesses the financial security situation of Vietnam in the period 2011-2021 on actual contents such as stability, financial soundness, and efficiency in resource allocation for the economy; risk management capacity of regulators and financial institutions; ability to absorb and withstand shocks, thereby indicating the achieved results, limitations and causes Thirdly, the dissertation clarifies the domestic and international context affecting Vietnam's financial security Such as the impact of the Covid-19 pandemic; the impact of the integration process; the impact of the trend of digital transformation; the impact of the international political instability and conflicts; the impact of globalization and market fragmentation; the influence of powerful countries The dissertation also gives five perspectives on ensuring the financial security of Vietnam, from which the dissertation proposes four groups of solutions to ensure the financial security of Vietnam toward 2030 The solutions include a group of solutions to improve stability, financial soundness, and efficiency of resource allocation; a group of solutions to improve risk management and prevention capacity; a group of solutions for perfecting the mechanism of absorbing and resisting shocks; a group of solutions to establish a digital financial foundation and develop modern financial infrastructure in the context of the fourth industrial revolution Structure of the dissertation In addition to the introduction, conclusion, list of references, drawings, illustrative tables, and appendices, the dissertation content is structured into four chapters and ten sections Chapter OVERVIEW OF RESEARCH SITUATION RELATED TO FINANCIAL SECURITY IN THE CONTEXT OF THE MARKET ECONOMIC 1.1 DOMESTIC AND FOREIGN RESEARCH RELATED TO FINANCIAL SECURITY IN THE CONTEXT OF THE MARKET ECONOMY 1.1.1 Research works on the concept, content, and factors affecting financial security in the context of the market economy 1.1.2 Research works on the framework and criteria for assessing financial security in the context of the market economy 1.1.3 Research works on an actual assessment of the financial security situation in Vietnam and some other countries in the context of the market economy 1.2 GENERAL ASSESSMENT AND ISSUES NEED TO CONTINUE RESEARCH 1.2.1 Overall evaluation of published research results - In theory: Some studies have built a general theoretical framework on finance and financial security, such as content, nature of finance, the relationship between finance and the real economy, between finance and public policies; the concept of financial stability, the causes of the crisis, the criteria for assessing financial stability, the development trend of the financial system; challenges of the financial system before the trend of financial liberalization, the development of science and technology, the impact of the internationalization of currencies - In practice: The studies mainly focus on analyzing and evaluating experiences ensuring financial security from historical financial crises such as the 1997 East Asian financial crisis and the 2008 global financial crisis Studies have shown manifestations of crisis and areas of origin of unrest Studies have also provided solutions to countries' responses to the financial crisis in various aspects, such as legal issues, risk management issues, organizational reform, and organizational improvement regimes Some recent domestic studies had also assessed Vietnam's financial security in recent times in association with new contexts such as the Fourth Industrial Revolution, globalization, and the financial and monetary security of Vietnam before the fluctuations of the world financial market and proposed some solutions and recommendations in the period up to 2030 1.2.2 The gap needs further research in the dissertation - Theoretical gaps need further clarification Firstly, approaching financial security in the context of the market economy from the political economy perspective derives from the nature and function of finance, which is the socio-economic relationships in the analysis process distribution of values and social wealth related to the interests of actors in the economy Therefore, when studying financial security in the market economy, it is necessary to analyze the relationship of benefits in a dialectical relationship with financial security From there, develop the concept and clarify the content and content of financial security Second, systematize and clarify the factors affecting financial security in the context of the market economy in association with the current new context and build a system of indicators to evaluate financial security in the context of the market economy - Practical gaps need to be studied Through the overview of the research situation related to the dissertation topic, the Ph.D student found that there have been few systematic and comprehensive studies on Vietnam's financial security in the current context of the market economy Therefore, there are many open issues, for example: What is Vietnam's current financial security situation since the 2008 world financial crisis, especially in the past ten years? What is the impact of the Covid-19 pandemic on Vietnam's financial security today? What is the current context and trend of domestic and international economic and financial development and its impact on Vietnam's financial security? How the development of science and technology and the digital economy affect Vietnam's financial security? And especially what solutions can be given to ensure the financial security of Vietnam in the near future Although there are many such gaps, within the framework of this dissertation, the research focus will focus on the following practical aspects: Firstly, focus on clarifying the concept, evaluation criteria, and factors affecting financial security in the context of the market economy and pointing out the main changing trends of the domestic economy and finance and international as well as forecast its impact on the financial security of Vietnam Secondly, assess the financial security situation of Vietnam in the past time, find out the achieved results and the remaining limitations, and point out the causes Thirdly, propose some directions and solutions based on international experience, the current situation in Vietnam, and the carried out forecast analysis to ensure the financial security of Vietnam in the coming time Chapter THEORETICAL BASIS AND PRACTICE EXPERIENCE ON FINANCIAL SECURITY IN THE CONTEXT OF THE MARKET ECONOMY 2.1 CONCEPT AND THE NECESSITY TO GUARANTEE FINANCIAL SECURITY IN THE CONTEXT OF THE MARKET ECONOMY 2.1.1 The concept of financial security in the context of the market economy 2.1.1.1 Some concepts about financial security Currently, in the world, there are many different concepts of financial security, and there is not a single concept that is generally accepted and widely used in many countries Through analysis and syndissertation, it can see that some standard features in the concepts of financial security are: (1) The financial system operates stably and performs well the function of allocating resources and promoting economic processes (2) Capable of screening and spreading risks (3) Able to withstand shocks, ensuring safety From that, it can understand that financial security is a state in which financial relations are stable and healthy, contributing to the efficient allocation of resources to promote economic processes and, at the same time, being able to manage financial security, hedge, and withstand shocks 2.1.1.2 The concept of the dissertation on financial security in the context of the market economy From the perspective of political economy, financial security derives from the functions and practical requirements of finance in the market economy, whereby financial security must ensure the following three essential contents: (1) Ensuring resources allocate smoothly and effectively, meeting the needs and harmonizing the interests of economic actors in the development process; (2) ensuring the ability to monitor, supervise, inspect and evaluate financial activities, serving the management and prevention of risks (3) ensure there is a mechanism to absorb or withstand shocks (internal or external) that may occur In addition, when studying financial security, it must also be placed in the orientation and goals of the socio-economic development of the country Based on inheriting the existing studies and from the political economy perspective, the author proposes the concept of financial security in the market economy as follows: Financial security in the context of the market economy is a state in which financial relations occur stably and healthily, and resources are allocated efficiently and transparently, meeting the needs of actors in the economy while ensuring the ability to manage and prevent risks and having an effective mechanism to absorb or withstand shocks, creating conditions to promote socioeconomic development based on compliance with market rules 2.1.2 The necessity to ensure financial security in the context of the market economy First, the market economy itself requires financial security Second, economic devastation is often severe when a financial crisis occurs, so financial security must be ensured Third, when financial security is ensured, it will contribute to socio-political stability, national defense and security, and the country's sustainable development 2.2 CONTENTS, ASSESSMENT CRITERIA, AND FACTORS AFFECTING FINANCIAL SECURITY IN THE CONTEXT OF THE MARKET ECONOMY 2.2.1 The content of financial security in the context of the market economy 2.2.1.1 Ensuring an environment for financial relations to take place stably and healthily, resources are allocated efficiently and transparently, meeting the economic actors' needs First, financial security must ensure that financial relations occur stably and healthily Stability is the absence of abnormal fluctuations that may harm the economy, and stability is not static Stability means dynamic stability in the increasingly diverse economic sectors' financial relations development Stability can only be achieved based on healthy financial relationships and minimizing illegal and shady relationships Stability and soundness play an essential role in allocating resources to the economy, ensuring that capital is not stagnant or distributed unbalanced, which are potential factors for instability The State is the leading actor performing the functions and tasks of ensuring the environment so financial relations can occur stably and healthily 2.2.1.2 Improve the risk management and prevention capacity of regulatory agencies and financial institutions The financial system's stability is partly through self-regulatory mechanisms and market discipline, creating endogenous resilience to prevent plaguing problems that can develop into risks on the world market and the whole system Besides, external intervention is also required to avoid and overcome possible vulnerabilities to ensure stability In the modern market economy, in addition to respecting market rules, in any market, it is also necessary to have a management role in the State through specialized management agencies, public agencies, etc tools, standards, technical standards and evaluation, monitoring systems, handling, and operating mechanisms Capacity building for risk management and prevention must be done at the macro and micro levels In addition to improving the capacity of state management agencies, financial institutions must also improve It is also necessary to actively improve management capacity 2.2.1.3 Forming and establishing mechanisms to absorb or withstand economic shocks in general In order to have a mechanism to absorb or withstand shocks, it is necessary to establish a system of policies, the most important of which are still fiscal policy and monetary policy Harmonious coordination between the two policies is crucial to ensure general macroeconomic stability but still withstand the effects of shocks In addition, it is necessary to have reserve resources (reserves of all kinds) that can be used in urgent cases, which is a necessary foundation to ensure solvency, especially foreign exchange reserves ensuring that international trade activities are maintained It is crucial for countries with sizeable import-export turnover or significant economic openness 2.2.2 Criteria for assessing financial security in the context of the market economy 2.2.2.1 Criteria for assessing the level of financial stability, soundness, and efficiency in resource allocation for the economy ❖ Criteria for assessing the level of financial stability and soundness Indicator group 1: Strength of the economy (1) Economic scale and growth (GDP) (2) People's wealth (average GDP) Criterion group 2: Risks of the budget deficit and national debt First, raise financial safety standards and enhance information transparency The general trend is that capital adequacy, liquidity, and systemic risk standards raise to improve the financial system's safety, harmonize the business cycle, and reduce costs to the consumer population in a crisis Second, timely detection and handling of risks outside the financial system that may affect financial security A financial crisis can completely originate from a microevent The failure of a large firm can reduce market confidence, the risk of creating a Domino effect and creating an imbalance, affecting the entire financial system Third, timely response to the impact of the financial crisis A formal "crisis handling mechanism" should be developed/completed In which assigning specific responsibilities to state management agencies, establishing coordination mechanisms, issuing appropriate and timely policies, and setting up contingency financial sources (funds) for handling crises In addition, the role of the information disclosure agency is also essential Chapter FINANCIAL SECURITY STATUS OF VIETNAM IN THE CONTEXT OF THE MARKET ECONOMY FOR 2011-2021 3.1 OVERVIEW OF VIETNAM'S FINANCIAL SYSTEM 3.1.1 Financial Institutions 3.1.1.1 Credit institutions From 2011 to 2015: The project on restructuring the system of credit institutions from 2011 to 2015 was born to make it healthy, improve safety, and improve discipline in the credit institution system From 2015 to 2020: Many strict regulations were issued, such as Circular 41 (Basel II), Circular 22 (outstanding credit ratio to mobilized capital (LDR), short-term capital for medium and long-term loans, ) Results: many banks have completed the settlement of VAMC bad debts, the ownership structure at most banks is stable, and operational efficiency is increasing From 2020 to the present: The industry's competition level has increased Digital transformation, digital banking, and ecosystem are the goals being pursued by many banks 3.1.1.2 Other financial institutions ❖ Securities companies Since 2012, there has been tightening and reducing securities companies In 2013, there were 13 specially controlled securities companies and six controlled securities companies By 2014 there were only 89 securities companies In 2016 it continued to decrease to 76 securities companies, and by 2019 only 74 securities companies were operating in the market From 2020 to 2021, the number of securities companies tends to increase, with 89 securities companies operating in association with the development of the stock market during this period About personnel at securities companies: Mainly brokerage personnel, accounting for 69.47%; financial analysis practitioners accounted for 19.92%, and fund managers accounted for 10.61% 11 ❖ Insurance companies Currently, there are 72 insurance enterprises in Vietnam, including 31 life insurance enterprises, 18 non-life insurance enterprises, two reinsurance enterprises, 20 insurance brokerage enterprises, and one insurance company branch of foreign non-life insurance enterprises Insurance products are increasingly diversified, meeting the economy's and society's insurance needs Currently, there are about 2,894 insurance products belonging to all insurance lines The operating network of the insurance market is expanded, serving customers from sales, care and compensation 3.1.2 Financial markets and instruments 3.1.2.1 Interbank money market Over the years, the size of the interbank money market has been increasingly expanded The interbank market is where banks or credit institutions borrow from each other to support each other and share in difficult times with excess reserves to meet short-term liquidity needs 3.1.2.2 Credit market In the financial markets, the credit market is still the main channel for mobilizing and allocating capital for production and business activities of the economy In recent years, credit growth has consistently been above 12%, contributing to promoting and maintaining a relatively high GDP growth in Vietnam in the past period In the last two years of the epidemic, credit growth was at 12.17% and 13.61% in providing credit capital needed to help businesses overcome difficulties In terms of credit structure, from 2014 to now, credit for other service activities has always accounted for the highest proportion of outstanding loans, which shows that credit capital has yet to really focus much on the manufacturing sector 3.1.2.3 Stock market The stock market is becoming a powerful capital mobilization channel for the Vietnamese economy and is increasingly solid and complete in structure Activities through the Internet and digital platforms flourished People's awareness of the capital market has increased rapidly Investors in Vietnam's stock market are becoming increasingly mature, not overreacting to external information but behaving more in accordance with basic fundamentals 3.1.3 Financial Infrastructure 3.1.3.1 Legal system and state management Up to the present time, given the context and experimental conditions in Vietnam, the legal system is considered to be relatively complete for the financial system to operate Currently, there is the Law on State Budgets, Law on State Banks, Law on Credit Institutions, Law on Insurance Businesses, Law on Securities, and many other legal documents that contribute to perfecting the legal framework mechanisms and policies in line with international practices and standards, and better meet the requirements of state management in the financial sector 12 3.1.3.2 Organizational apparatus and mechanism for monitoring and enforcement Vietnam's financial supervision model currently follows a decentralized model based on institutions Accordingly, the State Bank shall inspect and supervise the activities of credit institutions, and the Ministry of Finance shall supervise securities and insurance activities (under the direct supervision of the State Securities Commission and the Insurance Department) 3.1.3.3 Information Infrastructure In recent years, Vietnam's credit depth index has improved significantly, from 5/8 points in 2015 to the maximum score of 8/8 in 2020; Credit information coverage also increased from 41.8% in 2015 to 59.6% in 2020 Even these indicators are higher than the averages of the Asia-Pacific region 3.1.3.4 Payment system and transaction support The non-cash payment system in Vietnam is being researched and perfected, and technical infrastructure and technology are being invested, improving quality and, at the same time, ensuring system security and safety In addition, the inter-bank electronic payment system is constantly being improved, ensuring stable operation, and providing the ability for large-scale transactions 3.2 FINANCIAL SECURITY SITUATION OF VIETNAM IN 2011-2021 3.2.1 Status of financial stability, soundness, and efficiency in resource allocation for the economy 3.2.1.1 Status of financial stability and soundness ❖ Strength of the economy (1) Scale and economic growth: Vietnam's GDP has continuously increased over the years According to the World Bank, in 2021, the GDP scale will reach 362.64 billion USD, ranking 39th out of 207 economies However economic growth rate fluctuates In the 2011-2019 period, GDP continuously grew at over 5% per year Since 2020, due to the impact of the Covid-19 pandemic, Vietnam's economic growth has dropped sharply because of the disruption of many economic activities (2) The level of people's wealth: Vietnam's GDP per capita has continuously increased over the years, including 2020, which was heavily affected by the pandemic However, compared with the average level of the world and some countries in the region, the income of Vietnamese people is still low ❖ Risks of the national budget deficit and national debt (3) National budget deficit/Total National budget revenue: 2015-2016, this rate is high and unsafe From 2017-2019 this ratio has decreased sharply and is at a safe level when it is only maintained at more than 10 % However, in 2020-2021 this rate tends to increase again due to the impact of Covid-19 State budget revenue is severely affected, and if this situation persists in the following years, it will be a risk of insecurity (4) National budget deficit/GDP: In the period 2011-2016, the ratio of the State budget deficit to the GDP of Vietnam was relatively high, exceeding the 13 threshold of 5%, setting the State of budget security in particular and financial security in general to the warning level The period 2017-2021 is the period when the state budget deficit compared to GDP is maintained at a low level of less than 5% to ensure safety, and it can be said that this is an excellent effort of the Government in balancing the budget and reducing the deficit spending (5) Public debt-to-GDP ratio: in 2011-2016, public debt continuously increased, from 50.8% of GDP in 2012 to nearly 65% of GDP in that period In 2017-2021, Vietnam's public debt was controlled sustainably, accounting for about 57% of GDP, within the safe threshold set by the National Assembly (6) Government debt/GDP: Government debt from 51.7% of GDP in 2017 to 39.1% of GDP in 2021 There are two reasons for this sharp decrease, which is due to a complete recalculation GDP size of the economy and GDP size increase in 2021 (7) The Government's direct debt repayment obligation compared to the total annual state budget revenue: In 2021, the Government's direct debt repayment obligation is about 368,276 billion VND, mainly domestic debt repayment with about 323,093 billion VND, equal to about 27.4% of budget revenue This index exceeds the threshold allowed by the National Assembly for the period 2016-2020 at 25% (8) Foreign debt/GDP: 2016 - 2020, this indicator tends to increase By the end of 2020, the country's external debt to GDP stood at 47.9%, close to the 50% threshold allowed by the National Assembly At some point, this target approached the 50% limit, putting pressure on the national foreign debt safety target (9) Foreign debt repayment obligation/Export turnover of goods and services: During the whole period 2016-2020, this target increased sharply, exceeding the limit allowed by the National Assembly of 25%, mainly due to activities capital withdrawal and principal repayment of short-term foreign loans of enterprises and credit institutions increased ❖ Risk of currency and credit instability (10) Inflation rate: 2011–2015, thanks to the synchronous application of tight fiscal and monetary policies, while promoting production, increasing exports and controlling trade deficit, etc., tends to decrease and reach a record low of 0.63% in 2015 From 2016 to 2021, Vietnam's inflation rate has always been stable at below 4% (11) Credit-to-GDP ratio: Vietnam's credit-to-GDP ratio is over 140%, in the group of countries with the highest rate according to international assessment Suppose this ratio continues to increase, and medium and long-term loans rely heavily on banks In that case, it will put tremendous pressure on the capital balance of the banking system and macro balance (12) Credit growth compared to GDP growth: in 2012-2017, this rate in Vietnam was relatively high, about 2.5-3 times In 2018, credit growth slowed down to strictly control credit This rate in the period of 2018-2019 was stable at approximately two times Due to the impact of Covid-19 in 2020 and 2021, credit 14 growth remains above 12%, but the GDP growth rate is only low It can be seen that credit cannot go into production and business generally from 2018 to 2019 (13) Current account deficit/GDP: From 2013 to 2021, Vietnam's current account can often be seen as a surplus There are some times when the balance is in deficit In 2021, due to the impact of the pandemic, the trade balance of goods and trade balance will be in deficit for two consecutive quarters, the current account of Vietnam is still at a safe threshold of less than 5% of GDP (14) Evolution and exchange rate management of the State Bank: In the period 2014-2020, it can be seen that the USD/VND exchange rate tends to increase from about 21,000 VND to more than 23,000 VND The central exchange rate is more market-oriented, more flexible, and can rise, fall and stand still, not showing a clear trend for speculation (15) The ratio of foreign exchange reserves to short-term foreign debt: in the period 2011-2015 averaged about 286.4%, and in the 2016-2020 period, about 296.8%, meeting the target of over 200% This is the buffer that helps Vietnam to withstand the economic shocks that are present around the world 3.2.1.2 Status of efficiency in resource allocation In the recent period, Vietnam's FDI index is at 0.35-0.4 and is in the range of emerging economies The weakness in Vietnam's financial development comes from its ability to access financial institutions, and the development of the financial market's depth is also at a low level of about 0.25 points 3.2.2 The current situation of improving management and risk prevention capabilities of regulatory agencies and financial institutions 3.2.2.1 Risk management and prevention in the banking sector ❖ For management agency Regarding the promulgation of legal frameworks and safety standards: Since 2014, the SBV has approved the roadmap for Basel implementation Determining that this is a key and essential job, the State Bank has actively implemented many solutions synchronously, paying particular attention to prioritizing the development of the legal framework Regarding the restructuring of the banking system in association with bad debt settlement: The legal regulations have gradually improved, helping the whole system of credit institutions to handle bad debts and achieve positive results The banking system's on-balance sheet bad debt ratio has continuously decreased and remained below 3% since 2014 Monitoring the macroprudential system: In 2015, the SBV began to develop a macroprudential policy framework, including three main components: monitoring and supervision of systemic risks, macro safety tool selection and implementation, and a suitable institutional framework Regarding inspection and supervision activities with credit institutions: Annually, the State Bank of Vietnam has conducted hundreds of inspections, 15 assessing each credit institution's financial status and clarifying the major and common weaknesses and risks of credit institutions to propose handling measures and propose solutions to restructure credit institutions ❖ For banks Regarding the ability to meet Basel II standards: Practice shows that raising capital to meet Basel II standards is still a big challenge for banks, especially in the context that banks still have to focus on handling bad debts of banks many years ago Regarding bad debt settlement: The bad debt settlement and restructuring of credit institutions of the whole system have had many positive signs, achieving the implementation plan of Decision No 843/QD-TTg and Decision No 1058/ According to the Prime Minister's Decision, the bad debt ratio on the balance sheet is always lower than 3% 3.2.2.2 Risk management and prevention in the insurance sector ❖ For management agency On completing the legal framework on insurance business: The Law on Insurance Business (amended) was just passed at the 3rd Session of the XV National Assembly on June 16, 2022, and took effect from January 1, 2023 It has followed seven main contents to increase the autonomy of businesses in business activities, and the management agencies refrain from interfering too deeply with technical aspects in the operation of insurance companies such as before Regarding the mechanism and activities to supervise the insurance market: Vietnam's supervisory authority is applying a compliance monitoring method focusing on assessing the soundness of financial activities and solvency of insurers in Vietnam The evaluation time is based on the business situation of the insurer in the past ❖ For insurance companies Total assets, equity, and professional reserve fund of insurance companies are increasing, ensuring the business's solvency, especially for the risks that the insurance company faces, such as insurance risk, interest rate risk, market risk, credit risk, and operational risk Investment activities of enterprises ensure safety, efficiency, and liquidity 3.2.2.3 Risk management and prevention in the securities sector ❖ For management agency Legal framework for securities trading organizations: The Ministry of Finance has issued Circular 226/2010/TT-BTC, Circular 165/2012/TT-BTC, Circular 87/2017/TT-BTC, 91/ 2020/TT-BTC stipulates financial safety norms and handling measures for securities trading organizations that not meet financial safety criteria Legal framework for market management and supervision: The Ministry of Finance has issued Circular 13/2013/TT-BTC, followed by Circular 115/2017/TT-BTC, and most recently, Circular 95/2020/ TT-BTC guides the supervision of securities transactions on the stock market 16 Regarding the mechanism and activities of market supervision: Since January 1, 2021, the Securities Law 2019 officially took effect, the supervision of the stock market continues to be consolidated and perfected Regulations on the roles and responsibilities of supervision of the market management and supervision agencies - the State Securities Commission, the Stock Exchange, the Securities Depository and Clearing Corporation, the securities company, and the custodian bank ❖ For securities companies The average ratio of available capital of securities companies increases gradually over the years The indicators ROS, ROA, and ROE of securities companies in the period of 2013-2019 have increased and decreased, but all have positive values Thereby, the business results and financial situation of Vietnamese securities companies in the period 2013-2019 are relatively stable and have many positive signs 3.2.3 The reality of the ability to absorb and withstand shocks In the past ten years, the biggest shock affecting the economy in general and financial security, in particular, was the Covid-19 pandemic Regarding the timeliness and effectiveness of policies: In general, the fiscal and monetary policies are timely and practical towards the goal of increasing the resilience of the economy in the context of the pandemic, ensuring social security, unemployment insurance, allowances for workers and vulnerable subjects; tax reduction for small and medium enterprises; encourage production, in order to restore consumer confidence, restore business confidence, create jobs and reduce unemployment Ability to mobilize, arrange and use financial resources: Fiscal support package of VND 180,000 billion, an extension of time limit for payment of value-added tax, corporate income tax, personal income tax, and land rent for five target groups Support package of 62,000 billion VND for social security This is the first package of "fresh money" from the state budget used to support people during the pandemic with the motto "leaving no one behind." Credit support package of VND 300,000 billion to extend debt and reduce interest rates when borrowing from banks The total value of the three bailout packages is equivalent to about 8% of Vietnam's GDP Results: Economic growth was positive again after the third quarter of 2021 at -6.17%, and the whole year of 2021 GDP growth at 2.58% The economy is heading towards a recovery, back to a new normal 3.3 GENERAL ASSESSMENT OF VIETNAM'S FINANCIAL SECURITY FOR 2011-2021 3.3.1 Achievements 3.3.1.1 Financial stability, soundness, and efficiency in resource allocation (1) the strength of the economy is increasingly consolidated and increased; (2) budget deficit and public debt are gradually better controlled; (3) inflation is well controlled, especially from 2016 up to now; (4) the exchange rate is operated according to the central exchange rate mechanism to ensure macro-balance; (5) 17 the current account is constantly in surplus, foreign exchange reserves are abundant; (6) Vietnam's financial development index is at the average world level, belonging to the group of emerging economies 3.3.1.2 The capacity to manage and prevent risks ❖ In the banking sector (1) The State Bank has accelerated the application of safety standards under Basel II, which is considered a strategic solution, qualitatively changed, creating a foundation for the Vietnamese banking system to be fully functional efforts to meet the requirements of development and integration, and at the same time strengthen supervision of the performance of banks; (2) Supervision of macrosystem safety is also implemented by the State Bank and increasingly standardizes the process to monitor and monitor systemic risks; (3) Banks actively applied Basel II, some banks completed all three pillars of Basel II ahead of schedule and progressed to Basel III (4) The State Bank also accelerated the bad debt settlement process according to Resolution 42/2017/QH14 of the National Assembly and the Project "Restructuring the system of credit institutions associated with bad debt settlement for the period 2016-2020." ❖ In the field of insurance (1) The legal system of the insurance business is increasingly being improved in the direction of modernity, enhancing transparency, disclosing information, and creating a competitive environment in the direction of integration (2) The financial security of enterprises in the insurance market is ensured, and the indicators of total assets, equity, and professional reserve fund of insurance companies are increasing to ensure solvency Investment activities of enterprises ensure safety, efficiency, and liquidity ❖ In the field of securities (1) The legal framework for securities trading organizations is increasingly being improved, with regulations on financial safety according to CAMEL standards; (2) The legal framework for market supervision is gradually updated and synchronized as well as ensuring more comprehensiveness; (3) During the process of supervision and inspection, the SSC has cooperated with functional agencies to detect many cases; at the same time, strictly handle individuals and organizations that commit acts of manipulation, insider information and other violations of the law; (4) The stock market develops more stably, the scale is expanding, the stock market gradually becomes an important medium and long-term capital mobilization channel of the economy 3.3.1.3 The ability to absorb and withstand shocks (1) The effectiveness of the promulgated policies, ensuring the right focus, in line with the objectives of each period; (2) good coordination between policies; (3) balance financial resources, reserve in the process of responding to shocks, ensure sufficient resources and ensure budget discipline; (4) Besides, doing well the information and communication work to ensure social stability 3.3.2 Limitations and reasons 18 3.3.2.1 Financial stability and soundness, and efficiency in resource allocation Firstly, the economy's strength has improved but needs to be more modest, not creating a safe premise large enough for sustainable financial security The low quality of growth reflected in the ICOR index of Vietnam is still relatively high compared to other countries in the region; The structure of GDP needs to be more sustainable; In addition, per capita income still needs to be higher The reason is that the stability and quality of growth are still low Second, the budget deficit, public debt, and external debt are increasing, and there is a risk of exceeding the safe threshold, especially in the context of the impact of the Covid-19 pandemic The reason is that Vietnam is in the stage of investment in infrastructure development, vital economic sectors, and critical economic regions, so the budget used for development investment is enormous In addition, the decrease in ODA capital forced the Government to use the budget and issue bonds for investment Along with budget revenue, it is facing difficulties in the context of the prolonged impact of the Covid pandemic Third, the debt ratio is getting larger and larger relative to the size of the economy The reason is that the financial market has not had a stable and healthy development, especially since there has not been a balance between the money and capital markets Fourth, the contribution of financial development to economic growth is still limited The reason is that people's access to financial institutions and financial services, although improved, is still quite low Besides, the in-depth development of the financial market is still low, and the capitalization value of the stock market compared to GDP is still low compared to other countries in the region 3.3.2.2 Capacity of management and prevent risks - Regarding the national financial supervision model: The financial supervision model is distributed by specialization but lacks close and effective coordination among agencies in the financial safety net; the monitoring method is biased towards compliance monitoring, not paying due attention to risk-based supervision; Careful monitoring of the financial market has not been paid due attention - In the banking sector: Currently, the world has applied Basel III and moved to Basel IV, while in the country, some banks are still struggling with Basel II The roadmap to apply until 2021 has not been properly implemented and must be adjusted Time adjustment applies to some banks The problem of capital is still a big problem for banks to meet the requirements and meet Basel II standards, especially in the context of the recent unfavorable stock market, while banks are still focusing on bad debt settlement - In the field of insurance: The legal system has not been completed fully and synchronously and is in the process of being perfected, leading to a lack of transparency, unfair competition, profiteering, and insurance fraud Along with that, the overall structure of the market is not balanced when the reinsurance market is still in its infancy 19 - In the field of securities: Acts of circumvention, manipulation, and false information adversely affect the market, but consecutively detected violations cause psychological confidence in investors in the securities market affected the market The reason is that the legal system has not been fully completed, synchronous and modern 3.3.2.3 The ability to absorb and withstand shocks Firstly, there are still gaps in the policy enforcement mechanism, which leads to policy corruption and profiteering on policies in response to the Covid19 pandemic shock Due to the existence of group interests, related ministries and agencies lack inspection and supervision, transparency, responsibility, and loss of leadership, direction, and management Second, there are still some limitations in accessing support packages for people and businesses Causes: Complicated procedures, limited access to information, inappropriate or insufficient support solutions Chapter BACKGROUND, PERSPECTIVES, AND SOLUTIONS TO ENSURE FINANCIAL SECURITY IN VIETNAM TOWARD 2030 4.1 COUNTRY AND INTERNATIONAL CONTEXT IMPACTS ON VIETNAM'S FINANCIAL SECURITY 4.1.1 Country context The long-lasting impact of the Covid-19 Pandemic adversely affecting financial security: (1) The pressure of bad debt increased; (2) Risks from the stock market and real estate market; (3) Cybersecurity and financial crimes are increasingly complex Large economic openness and deeper integration: (1) FTA commitments have brought great opportunities for Vietnam and, at the same time, have and will have a certain impact, directly reducing state budget revenues government; (2) The process of financial liberalization can increase volatility because the economy will be exposed to international economic shocks directly, or it can also amplify and exacerbate domestic shocks country Trends of digital transformation and financial technology: (1) the legal framework for the development and supervision of financial - banking services to meet the requirements of digital transformation; (2) the rapid development and increase of digital currencies, along with international payment gateways such as Paypal, Payoneer, Payeer making foreign exchange transactions and international money transfers difficult to control influence on the management of national monetary policy; (3) the financial supervision system will be challenged in the context of rapidly changing financial relations in the market; (4) challenges in completing infrastructure, information technology systems and researching and applying new technologies, building experimental legal frameworks 4.1.2 International context Instability and geopolitical conflicts: The Russia-Ukraine war has been causing negative impacts on the world economy and finance, including Vietnam (1) the war 20 has caused oil prices worldwide to rise for many months, greatly affecting domestic production and business activities and putting pressure on inflation in 2022 (2) the war also caused fluctuations in the international monetary system (3) The war has disrupted global trade Many Vietnamese exporters have had their orders stopped, the supply of raw materials has been disrupted, and payment measures have been delayed, directly affecting the economy's corporate financial security Globalization and market division, the influence of major countries: (1) The globalization process is facing difficulties and may change direction, and the global economy may become fragmented (2) The underground race between countries and alliances, especially the competition between big countries, is always smoldering (3) major countries play a key role in shaping the world order and situation, building the game's rules, and resolving emerging problems in the region and the world Vietnam will become the object of manipulation and competition by major countries in the world, not only politically but also economically 4.2 PERSPECTIVES AND SOLUTIONS TO ENSURE THE FINANCIAL SECURITY OF VIETNAM TOWARD 2030 (1) Ensuring financial security is an essential task in the process of development and integration Financial security must firmly ensure national interests; (2) ensuring financial security must be associated with actively promoting the role of finance in socio-economic development in the context of a socialist-oriented market economy; (3) ensuring financial security must enhance the ability to adapt to the context of increasing political, economic and financial instability in the world; (4) ensuring financial security must be based on internal resources to be decisive; (5) Ensuring financial security must be associated with constantly developing a modern financial system in line with the trend of digital transformation and the industrial revolution 4.0 4.2.2 Solutions to ensure Vietnam's financial security toward 2030 4.2.2.1 Group of solutions to improve financial stability, soundness, and efficiency in resource allocation Solutions to improve the strength of the economy, creating a foundation for sustainable financial security: (1) improve the efficiency of investment capital, improve the ICOR index; (2) promote the role of the private economy, adjust GDP structure; (3) improve labor productivity Solutions to control the budget deficit and ensure public debt safety: (1) in the short term, strengthen the management of state budget revenue; (2) strengthen and improve the efficiency of state budget expenditure; (3) promote the restructuring of public debt in a sustainable way to improve debt safety Solutions to control the growth rate of outstanding loans, control bad debts, and improve the efficiency of credit: (1) Prioritize and focus on lending to industries and sectors that encourage and serve products export, import, and international payment; (2) Strictly control the growth rate of credit balance, credit quality for potential risk areas 21 Solutions to promote the role of financial development in economic growth: (1) Improve indicators of accessibility to financial institutions, improve access to financial products and services for people and businesses; (2) Deeply develop the financial market, further promote the role of the stock market, so that the stock market becomes an increasingly important capital mobilization channel of the economy 4.2.2.2 Group of solutions to improve risk management and prevention Solutions to improve the efficiency of the national financial supervision model (1) Need to enhance further the role of the State Bank of Vietnam in the management and supervision of the financial system; (2) improve supervision effectiveness for specialized supervisory agencies Solutions to improve management capacity, and risk prevention in the field of Banks For regulators: The SBV needs to develop a roadmap, steps, and specific regulations, and at the same time, have a systematic approach to guiding commercial banks to implement to standardize on all three pillars of Basel II and followed by Basel III with the entire commercial banking system, Enhance experience exchange activities Banks: Need to research, update knowledge actively, and improve professional skills; Actively develop plans and roadmaps to upgrade technology infrastructure for the application of Basel II and Basel III standards; It is necessary to be aware of the importance of operational risk management, to comply with international standards as a top task, in addition to the implementation of business targets Solutions to improve risk management and prevention in the insurance industry For state management agencies: It is necessary to soon complete and approve the development strategy of Vietnam's insurance market to 2030 under the direction of the Government in Decision 368/QD-TTg Continue to review, supplement and complete regulations on state management of insurance business activities to create a safe, transparent and efficient market Innovating and perfecting the method of management and supervision with the market, gradually switching to risk management and monitoring instead of just implementing compliance monitoring For insurance enterprises: strengthen internal control, internal audit, improve governance capacity, especially risk management according to international standards Regular disclosure of information ensures comprehensive information, including qualitative and quantitative information, to promote transparency, accountability, and fair competition Promote the application of information technology in business activities Solutions to improve management capacity and risk prevention in the securities sector: (1) Actively improve the legal framework, focus efforts to introduce new regulations and policies of the Securities Law and other documents provide practical guidance to support businesses, protect the legitimate rights and interests of investors, and create a driving force for Vietnam's stock market to develop sustainably; (2) Completing the development of the stock market development strategy in the 2021-2030 period to shape the long-term goals, solutions and roadmap for stock market 22 development; (3) Promote propaganda, strengthen the provision of official information to help raise awareness, understanding and financial skills of investors, especially individual investors, thereby contributing to investors participate in the stock market safely and efficiently; (4) To step up the inspection, inspection and supervision of market activities, especially the individual corporate bond market; (5) Continue to improve the quality of corporate governance, risk management of listed companies, public companies in accordance with international practices 4.2.2.3 Solution for perfecting the mechanism of absorbing and resisting shocks (1) First of all, it is necessary to perfect the mechanism of monitoring and forecasting for crisis prevention based on a regular and thorough assessment of the system of macro and micro safety indicators; (2) Defining specific responsibilities of state management agencies, establishing coordination mechanisms, issuing appropriate and timely policies and setting up contingency financial sources (funds) for handling crisis; (3) At the same time, promote the role of information and communication agencies in maintaining social stability; (4) Preventing and combating corruption, negatively, aggressively investigating, prosecuting and publicly adjudicating major corruption cases, both in the State sector and in the private sector related to policy profiteering 4.2.2.4 Solutions to establish a digital financial platform and develop modern financial infrastructure in the context of the industrial revolution 4.0 (1) Researching and applying some core technologies capable of creating strong breakthroughs, such as artificial intelligence, blockchain, big data, and virtual reality, facilitating the application of advanced digital technologies in deploying e-finance towards digital finance (2) Building smart governance platforms to provide smart financial services (3) Deploying an overall information technology system for management, supervision, transactions, and market operations to automate some tax management business processes and analyze big data for policy making and forecasting (4) Encourage enterprises to invest in technological innovation, research and development, and business investment in information technology and other advanced technologies CONCLUSION Financial security has an increasingly important position and role in the sustainable development of a country Ensuring financial security creates a stable macroeconomic environment and ensures political and military security in the current context of world turmoil and tension Financial security includes the following aspects: Ensuring an environment for financial relations to take place stably and healthily, and resources being allocated effectively and transparently, and meeting the needs of the actors in the economy; improving the risk management and prevention capabilities of regulatory agencies and financial institutions; form and establish mechanisms to absorb or resist shocks With a wide and complex connotation, financial security is also affected by many factors, including factors inside the financial system related to risks belonging 23 to financial institutions (risks), operational risks, financial risks, legal risks ), risks in the financial market (assess mispricing, operational risks, chain mechanisms ) financial infrastructure (payment system risk, legal risk, communication ); factors outside the financial system such as macroeconomic disturbances (economic environment risks, policy imbalances, etc.), or event risks (natural disasters, epidemics, events, etc.) politics…) In the period 2011-2021, although Vietnam's financial security is maintained and guaranteed, there are still many shortcomings and not really sustainable, such as (i) the strength of the economy is still low rather modest, has not yet created a safety premise large enough to ensure financial security; (ii) the budget deficit and public debt and foreign debt are increasing, there is a risk of exceeding the safe threshold, especially in the context of the impact of the Covid-19 pandemic; (iii) an increasing debt ratio relative to the size of the economy will put tremendous pressure on the capital balance of the banking system and the macro balance; (iv) the contribution of financial development to economic growth is limited when people's accessibility and depth of financial markets are low; (v) the ability to manage and prevent risks of regulators and financial institutions has some limitations, especially in terms of the degree of completion of the legal system, the supervision system, leading to the remaining at mistakes and instability in the market; (vi) mechanisms to absorb and withstand shocks, there are some shortcomings related to monitoring and ensuring transparency in the implementation of response policies To overcome the above shortcomings, in the new domestic and international context, the solutions to be implemented include: (i) Enhance the strength of the economy: improve the efficiency of the use of investment capital, improve the number of ICORs, adjusting GDP growth structure, promoting the role of the private economy, improving social labor productivity; (ii) control the budget deficit, ensure public debt safety: strengthen the management of state budget revenue, improve the efficiency of state budget expenditure, accelerate the restructuring of public debt towards a sustainable direction; (iii) control the growth rate of outstanding loans, control bad debts, improve the efficiency of credit; (iv) improving the effectiveness of the national financial supervision model: further enhancing the role of the SBV in managing and supervising the financial system, improving supervision effectiveness for specialized supervisory agencies; (v) accelerating the application of Basel II standards and moving towards Basel III in the banking sector; (vi) Complete the synchronous and modern legal framework and strengthen the management and supervision of the securities and insurance markets; (vii) Improve the mechanism to absorb and withstand shocks; (viii) Establish a digital financial platform and develop a modern financial infrastructure 24 ... economy Economic and financial activities take place extraordinarily diverse and complex Instability and crisis can arise from many areas of the economy and finance In Vietnam, the financial sector... contents, methods, and quantitative and technical indicators of finance to assess and analyze financial security developments Instead, the dissertation focuses on analyzing and clarifying the... management agencies, public agencies, etc tools, standards, technical standards and evaluation, monitoring systems, handling, and operating mechanisms Capacity building for risk management and