Topic monetary policy stabilizes the macroeconomy in the context of international trade tensions

DIPLOMATIC ACADEMY OF VIETNAM FACULTY OF INTERNATIONAL ECONOMICS FINAL COURSE PAPER Module: MACROECONOMICS Topic: MONETARY POLICY STABILIZES THE MACROECONOMY IN THE CONTEXT OF INTERNATIONAL TRADE TENSIONS Lecturer: Group: Nguyễn Đức Phúc, M.A Group – KT47A1 Hà Nội – 2022 MEMBERS OF GROUP 8: Nguyễn Thị Minh Thùy KT47A1-0241 (Leader) Phạm Minh Anh KT47A1-0176 Bùi Việt Hương KT47A1-0201 Trần Thị Thùy Linh KT47A1-0207 Đoàn Thị Hồng Nhung KT47A1-0221 Nguyễn Thị Minh Phương KT47A1-0225 Nguyễn Phương Thảo KT47A1-0235 TABLE OF CONTENTS PROLOGUE The paper’s necessity….…………… ………… …… …………………… ……… The research’s purposes… ……………………………………….……….……… The paper’s extent and object………………… …………… ….…….………….4 The research’s methods………… ……………………………….……….…………5 The paper’s structure….…………………………………… ………….……….… CONTENT SECTIONS Chapter 1: Overview of international trade tensions.………… ………………5 1.1 The importance of monetary policy in managing the macroeconomy ….… 1.2 Major fluctuations in international trade in the period 2020-2022…… ……6 1.3 How does international trade volatility affect Vietnam? …… … 18 Chapter 2: Monetary policy stabilizes the macroeconomy in the context of international trade tensions ………………………………………………………….21 2.1 Purpose……………………………………………………… … ………….………21 2.2 Content……………………………………… …… ……………… ……….……22 2.3 How to implement and organize implemantation………………… …… … 30 Chapter 3: Feasibility in policy implementation……………………………… 34 EPILOGUE References……………………………….…………………… ………… ……………36 ABBREVIATIONS Serial Abbreviation symbol Full script SBV State Bank of Vietnam VND Vietnamese Dong USD United States Dollars GDP Gross Domestic Product IMF International Monetary Fund WFP World Food Program ECA Economics Commission of Africa FDI Foreign Direct Investment SWIFT Society for Worldwide Interbank Financial Telecommunications 10 CPI Consumer Price Index PROLOGUE The paper’s necessity Globalization and international economic integration are objective requirements and are currently taking place strongly all over the world, facilitating the effective combination of domestic and foreign resources, expanding the space for economic development for countries However, it is the rapid development of globalization and international economic integration that has made the economies of countries deeply interdependent As a result, every event that occurs in any region of the world affects the global economy and trade In the context of a series of environmental events, epidemics, wars, conflicts, etc., which have a strong impact on the global economy today, countries need to have specific policies to respond minimize the consequences for the economy One of the most effective policies a country can use to govern its economy is monetary policy For many years, Vietnam has used monetary policy as a tool to regulate the macroeconomy and achieved certain successes, maintaining economic growth momentum, and minimizing disadvantages However, in order to contribute to the construction of a more effective monetary policy, more suitable to the current situation, our group chose the topic "Monetary policy stabilizes the macro-economy in the context of international trade tensions" for study in this final essay The research purposes The purpose of the study is to give an overview of the international trade situation with many fluctuations, indicating the impact of those fluctuations on the Vietnamese economy From there, propose appropriate monetary policies and assign tasks to ministries and sectors in order to stabilize the macro-economy and contribute to economic development The paper's extent and object Research object: international trade tensions, monetary policy in Vietnam Research extent: current situation from 2020 to present, policy proposals from now to 2030 The research methods The topic uses research methods: statistics, comparison, analysis and synthesis of available data, thereby proposing policies The paper’s structure The paper consists of chapters: Chapter 1: Overview of international trade tensions Chapter 2: Monetary policy stabilizes the macro-economy in the context of international trade tensions Chapter 3: Advantages and challenges in implementing monetary policy CONTENT SECTIONS Chapter 1: Overview of international trade tensions 1.1 The importance of monetary policy in managing the macroeconomy Monetary policy plays an important role in regulating the amount of money circulating in the economy Through this policy, the Government and the State Bank control the monetary system Thereby achieving the objectives such as controlling inflation, reducing unemployment, stabilizing prices, stabilizing the purchasing power of the currency, and promoting economic growth In addition, monetary policy is also a tool for the State Bank to control the operation of all commercial banks and credit institutions nationwide Economic growth: This is the top goal The increase or decrease in the volume of money affects the aggregate demand and the interest rate Thereby increasing production investment and total national output Stabilizing market prices: Stabilizing prices will help the state plan well the direction of economic development This also helps to stabilize the investment environment and attract many investment capital sources Stable interest rate: Based on the lending trajectory created from the deposits of the society and the interest rate system in line with the market mechanism Stabilization of foreign exchange and financial markets: Stabilization of financial markets is driven by stability of interest rates Exchange rate fluctuations greatly affect purchasing power and economic activities However, besides the important roles, monetary policy has certain limitations such as: The effect of monetary policy will be lower when private investment is not sensitive to interest rates When interest rates increase, the cost (or capital) of inputs to businesses increases, which causes output prices to continue to rise, and inflation is not controlled Therefore, monetary policy will become less effective if the government is not committed to controlling the printing of more money Thereby, at a time when the government wants to control inflation with the use of tight monetary policy, facing pressure to cover the budget deficit, the government can print more money That will have the opposite effect with tight monetary policy Using expansionary monetary policy will cause interest rates to fall too low, which makes individuals unwilling to deposit money in banks and decide to hold cash This makes the commercial banking system lack of loan capital, which will affect the private investment cannot expand, reduce the effectiveness of the policy 1.2 Major fluctuations in international trade in the period 2020-2022 1.2.1 Changes in international trade after the COVID-19 pandemic COVID-19 and the Effects on Supply Chains in Vietnam The COVID-19 pandemic has slowed global trade and disrupted supply chains The virus, which first started in China, shut manufacturing facilities for an extended period of time As China, known as the factory of the world, shut factories, it resulted in a ripple effect battering global supply chains with businesses struggling to source raw inputs This has particularly affected Vietnam, which relies on China for importing raw materials for its industries while also exporting to the country A survey in February by the American Chamber of Commerce (AmCham) revealed that a majority of its members were reporting difficulties in sourcing supplies and materials from Chinese suppliers In addition, 70 percent of its members stated they were operating at just 70 percent capacity Businesses suspending production Several automobile manufactures including Honda, Toyota, Nissan and Ford that have production plants in Vietnam have suspended production due to the pandemic Businesses across all sectors in Vietnam are facing disruptions particularly as Vietnam is currently in a two-week social isolation program, where only essential businesses operate Vietnam economy resilient: World Bank And yet, while Vietnam remains exposed to COVID-19, its economy remains resilient as per the World Bank In its report East Asian and the Pacific in the Time of COVID-19, Vietnam due to its integration with the global economy has suffered due to the pandemic particularly hurting manufacturing and tourism Nevertheless, exports expanded by percent in the first months of the year, while FDI inflows amounted to US$2.5 billion While this remains a difficult time, Vietnam is poised to overcome the ongoing crisis The report further states that while the pandemic can affect Vietnam’s economy in the short term – if the virus is contained – in the long-term Vietnam can manage external risks by diversifying trade flows and improving competitiveness Regarding monetary policy: Inflationary pressures due to supply bottlenecks may continue for some time, thus adding to pressure from higher energy prices The Government and relevant ministries and sectors such as the Ministry of Finance, the State Bank of Vietnam, the Ministry of Planning and Investment, the Ministry of Industry and Trade, etc need to continue their efforts to share information on how to respond to inflation, public publish relevant data and be ready to react quickly to any significant changes in the medium-term inflation outlook Firstly, ensure liquidity in the money market, create conditions for credit institutions to continue to reduce lending interest rates, and ready capital to support credit institutions to boost credit The COVID-19 pandemic has halted many activities, restricted people's movement, disrupted production and circulation, and disrupted cash flow Liquidity support solutions are deployed by most central banks to help markets operate smoothly, maintain cash flow, and support banks and businesses to ensure solvency Similarly, liquidity is maintained abundantly at the system of credit institutions on the basis that the State Bank buys a large amount of foreign currency, puts the dong on the market, and at the same time daily offers to buy valuable papers on the open market to signal ready to support liquidity, stabilize the money market This is reflected in the fact that the interbank interest rate - which is the interest rate for short-term mutual borrowing among credit institutions, has fallen to a very low level in history, ranging from 0.5%/year to 0.9%/year in the last year of September, reducing business, the State Bank has reduced interest rates times, total reduction of 1.5% 2.0%/year for operating interest rates In 2021, the State Bank of Vietnam will keep the operating interest rates at a low level even though the operating interest rates of many countries around the world have begun to increase In the first eight months of 2022, under the impact of the Russia-Ukraine war, despite domestic inflation pressure and the general interest rate increase trend of many countries around the world, the SBV still kept the operating interest rates unchanged in order to create favorable conditions on interest rates for businesses and individuals to borrow capital to restore and develop production and business activities, and at the same time to help businesses avoid interest rate risks when interest rates are constantly fluctuating By September 23, 2022, the State Bank of Vietnam will increase the operating interest rate by 1% per year; increase 0.3 - 1% maximum deposit interest rate in VND at credit institutions; keep the lending interest rate ceiling unchanged for priority sectors This is a timely solution, in line with the worldwide trend to prioritize controlling inflation and keeping exchange rates stable Credit policy The oriented credit growth target of the credit institution system is flexibly adjusted annually and from time to time by the State Bank to ensure that it closely follows the macroeconomic and monetary market developments, in line with the overall balance of capital sources other economy and on the basis of the request of credit institutions In 2020, credit growth is 12.1% In 2021, credit growth will reach 13.5% At the beginning of 2022, the State Bank will continue to assign credit growth targets to each credit institution in the direction of a credit growth rate of about 14% for the whole system, with adjustments in line with actual developments and situations The State Bank directs credit institutions to grow in parallel with improving credit quality, minimizing bad debts, and directing credit flows to production, business, and priority areas according to the Government's policy; Strictly control risks in granting credit for the purpose of investment and trading in real estate, securities, BOT projects, BT transport, corporate bonds; Control foreign currency credit in line with the roadmap to limit dollarization of the economy according to the Government's policy; Control the level of credit concentration on a few customers, large customer groups, large-scale projects Other policies 25 Ensure liquidity in the interbank market to promptly provide capital to credit institutions The SBV always ensures smooth liquidity in the money market Through open market operations, the SBV increases or decreases the monetary base, thereby increasing or decreasing the money supply in the market If they want to increase the money supply, the SBV buys valuable papers on the open market and if they want to tighten the currency, the SBV will sell valuable papers on the open market The purchase and sale of valuable papers will help regulate liquidity in the market to ensure liquidity targets in each period When the COVID-19 epidemic caused production and business activities to stop, cash flow was interrupted, to support credit institutions, businesses and people to maintain cash flow for production and business, the State Bank "pumped" a large amount of money VND to the market through the purchase of foreign currencies to increase the State's foreign exchange reserves, and at the same time daily offer to buy valuable papers on the open market to signal readiness to support liquidity for credit institutions, stabilize the currency field As a result, interbank interest rates at the end of September 2021 fell to a very low level in history, about 0.5%-0.9%/year, contributing to reducing the cost of capital of credit institutions, helping credit institutions reduce interest rates Stable exchange rate, foreign exchange market The Fed's interest rate hike has the purpose of curbing inflation in the US economy, the value of the dollar appreciates, but it will certainly affect the currencies of other countries The SBV began to control the impact of the USD appreciation by selling about billion USD in the first months of 2022 to stabilize the exchange rate, helping the VND depreciate at 2% against the USD, making the VND The dong is more stable than other currencies in Southeast Asia The stabilization of the exchange rate by the SBV creates favorable conditions for import-export enterprises, helping to minimize the adverse effects of the exchange rate on business activities of enterprises In addition to stabilizing the exchange rate, the SBV also ensures the supply of foreign currency for the domestic market According to the General Statistics Office, the trade balance of goods in September alone was estimated to have a surplus of 1.14 billion USD , trade surplus of 6.52 billion dollars , In investment activities, the flow of foreign direct investment (FDI) realized in Vietnam in the first nine months of 2022 26 also increased by 16.3% over the same period last year, reaching $15.43 billion Thus, the source of foreign currency from trade activities and FDI inflows into Vietnam has reached nearly 22 billion USD in the past months, not including remittances Thereby, creating conditions for the credit institution system to fully and promptly meet the legal foreign currency needs of organizations and individuals, especially, the demand for foreign currency to import essential commodities to serve the domestic and export business, contributing to stabilizing the market and supporting economic recovery Implement many other monetary policy solutions to remove difficulties and support customers and businesses affected by trade fluctuations During the COVID pandemic, the State Bank of Vietnam allowed credit institutions to restructure debt repayment terms, exempt and reduce interest and fees, and maintain the same debt group to support customers affected by the COVID-19 epidemic The State Bank has implemented a refinancing loan with an interest rate of 0%/year, without collateral for the Bank for Social Policies to allow employers to borrow loans to pay wages to stop working for employees, restore production business Accordingly, thousands of employees have been supported to pay wages during the work stoppage from these loan programs In addition, the State Bank of Vietnam also supports the settlement of loans of Vietnam Airlines, continues to implement programs of exemption and reduction of payment service fees for people and businesses When the wars in Russia and Ukraine broke out, many enterprises importing and exporting agricultural and aquatic products in Vietnam were worried because the goods could not be exported, the cost of storage increased, and the price of input materials increased sharply The State supports payment for businesses that have exported goods to Russia but financial transactions are stalled and find solutions to stabilize prices, diversify export markets and attract investment for businesses 2.2.2 Limitations and challenges of monetary policy With the State Bank, the Government's solution  The recent adjustment of high interest rates (from September 2022) has led to fluctuations in the VND/USD exchange rate, making it more difficult for businesses and people to access credit Moreover, if interest rates are unstable, businesses and people not dare to take investment risks The US Federal Reserve (FED) has had many quick and strong interest rate hikes It is expected 27 that by the end of 2022, the FED will raise the target interest rate above 4% and continue to maintain this interest rate until the end of 2023 Along the same trend, many central banks around the world also continue to raise interest rates operating According to the State Bank of Vietnam, the movements of world inflation and the Fed's decision to raise interest rates have not shown any signs of stopping, putting great pressure on investor sentiment, creating great devaluation pressure on currencies of emerging countries (including Vietnam) After this move by the State Bank, a series of commercial banks decided to increase deposit interest rates, thereby pushing up lending rates, and at the same time, the credit limit of banks was not much, so businesses and consumers have more difficulty in accessing bank capital If the interest rate increases for a long time, which means fewer jobs will be created, businesses have no conditions to expand production due to high interest rates, then the cost of borrowing will be high and thus leading to a debt limit competitiveness of the economy as well as of enterprises themselves As a result, the recovery of the economy will be affected  The compulsory reserve instrument has not been flexibly operated by the State Bank (SBV), so it has not been effective in increasing the ability to supply credit, reducing credit costs, increasing the ability to create money from which to affect lower interest rates in the economy  Administrative tools to tighten credit limits are making banks unable to lend more, the risk of black credit outbreak is very high In August 2022, the interest rate was lower than the present time, the demand for loans increased, many banks had reached the credit limit, so they could not lend, so they proposed the State Bank to increase the growth limit credit appropriately for participating banks to support customers On the other hand, during the post-pandemic economic recovery, the number of businesses returning to operation increased, the need to expand production also increased, so the capital demand was very large If they not get a successful bank loan, they will look to black credit institutions with higher interest rates to maintain business operations, which causes many other risks  Disbursement of support policy is slow The State has a policy to support the socio-economic recovery program for years (2022-2023) According to the 28 Ministry of Planning and Investment, by the end of August 2022, the policy of supporting 2% of interest rates on loans through commercial banks for businesses, cooperatives and households has only been implemented for 13.5 months billion Compared to the size of this support package of about VND 40,000 billion, the support rate is only about 0.03%, a very low number The paradox of businesses, business households, and cooperatives "hungry for capital" but unable to access the support package is a notable problem today  The response in policy administration of the State Bank is still not timely, especially in refinancing rice loans, lending to airlines, and only creating conditions for Vietnam Airlines (VNA), while other airlines have not been approved benefit from this policy during the COVID epidemic In addition, supporting businesses affected by trade tensions are still temporary solutions Vietnamese enterprises not have a contingency plan for risks, still heavily dependent on the external market With the actions of banks  The banking system still contains many risks related to backyard lending, ownership manipulation, corporate bond issuance to reverse debt… These risks have not been calculated , but if it is not promptly prevented, it will be out of reach of inspection and supervision agencies  The digitization to help reduce costs is still slow due to the gradual approach, which means that it is necessary to maintain both systems at the same time: traditional banking and digital banking 2.2.3 Some proposals to improve monetary policy in response to international trade tensions in the next years (2022-2025) The world economy in the period of 2022 - 2025 is forecasted to have more complicated developments in the context of increasing strategic competition between major countries, along with unpredictable factors from the Covid-19 pandemic, conflicts with Russia- Ukraine The global economic structure will change profoundly; accordingly, the production and consumption chain shifts in order to diversify and reduce excessive dependence on one country; The trend of digitizing the economy will be accelerated even after the epidemic ends, creating great changes in the way the 29 economy is organized and operated and promoting labor productivity The polarization in the global economic and political situation will promote the trend of association, forming groups of countries in different poles, forming economic, trade and financial blocks Climate change is happening faster than expected, negatively affecting agricultural production, marine economy, ecosystem and social security of governments Domestically, maintaining a positive economic background, Vietnam is currently a bright spot in the global and regional economic picture The Government has steadfastly advocated building and operating a "constructive government", ensuring macroeconomic stability, improving the business environment and speeding up the process of completing a society-oriented market economy socialist economy, promoting the private economy, selectively attracting foreign investment, accelerating the process of digitizing the economy, developing strong and modern services The free agreements signed in the past period are expected to have stronger effects in the period from now to 2025 Vietnam is in the period of a golden population with a rapid increase of the middle class, promoting consumption of goods and services, including modern banking facilities and services The Government orients to continue to be consistent with the goal of controlling inflation, stabilizing the macro-economy, striving for an average growth rate of 6.5-7.0%/year to be able to surpass the group of developing countries low-middle income development by 2025 Thus, our country is facing great opportunities and prospects in economic development However, the Covid-19 pandemic, the Russia-Ukraine war, the complicated and unpredictable changes of the international economy and politics, the trend of Industry 4.0, climate change require us to be smart, flexibly take advantage of opportunities and overcome challenges, striving to achieve the above-mentioned goals Firstly, the State Bank will continue to operate flexibly, cautiously, closely, harmoniously and effectively coordinate fiscal, monetary and other macro policies in order to restore and develop the economy, control inflation and achieve economic growth goals The State Bank continues to closely monitor and adapt to domestic and 30 foreign market developments, manage interest rates in line with inflation and domestic and foreign markets; continue to direct credit institutions to reduce operating costs to reduce lending interest rates Managing credit growth, supporting economic recovery but not being subjective to inflation risks Direct capital flows into production and business to create a driving force for sustainable growth In addition, the SBV manages the exchange rate flexibly and appropriately to stabilize the exchange rate and foreign currency market, contributing to controlling import inflation Secondly, promoting the restructuring of the system of credit institutions, focus on handling weak credit institutions, develop a system of credit institutions that operate in a healthy, quality, efficient, public, transparent manner, meeting the standards on safety of banking operations of credit institutions in accordance with international laws and practices Create favorable conditions for mergers and acquisitions of credit institutions on a voluntary basis to establish credit institutions with larger scale and better governance capacity The SBV studies to remove the credit limit for commercial banks that meet the criteria of Basel II and have a bad debt ratio of less than 3% in order to free up capacity and increase the initiative in granting healthy credit to banks that credit institution Avoid the burden of procedures and administrative interference as well as the situation of applying and giving to open a credit room Thirdly, strengthening inspection and supervision to ensure the safety and soundness in the operation of the credit institution system, proactively handle bad debts and prevent and limit the increase of bad debts Strengthening the role of the credit institution system in expanding and diversifying production and consumer lending products, increasing green credit, limiting black credit, ensuring people can access credit facilities credit services, especially consumer credit In addition, in order to speed up lending interest rates for businesses to restore production, the SBV needs to urge and support commercial banks to better implement the 2% commercial loan interest support package The fourth, strengthening digital transformation in banking activities and promote non-cash payment activities Carry out digital transformation in a focused, efficient and resource-free manner Digital transformation originates from the needs of people and businesses Developing online loan forms, opening online accounts, verifying eKYC accounts… 31 The fifth, specific and appropriate support policies for people, sectors and fields to be benefited Therefore, it is necessary to continue to have a package of social security support, support for the weak and workers who lose their jobs due to the epidemic or other events that disrupt international trade Focusing on giving priority to indirect interest rate support for industries with capital absorption and growth potential such as agriculture, processing industry, supporting industries, digital transformation, innovative start-ups, cooperation public-private partnership in traffic infrastructure construction, digital infrastructure, logistics, housing construction, urban embellishment, housing for low-income people, especially encouraging investment in private hospitals; at the same time, there is support for credit guarantee and credit guarantee fund for small and medium enterprises that need to be strengthened in terms of capital and personnel Support small and medium enterprises, areas and industries that are most vulnerable such as transportation, aviation, tourism, accommodation services, restaurants, hotels, amusement parks and entertainment 2.3 How to implement and organize implementation MACROECONOMIC STABILITY From now until the end of From 2023 to 2030 2022 State Bank Determine & Announce the Directs credit institutions to interest rate, the exchange improve their financial rate of VND capacity Discount, rediscount Inspect, examine and commercial paper supervise currency and banking Stipulating the required reserve ratio Monitor, supervise and timely forecast macroeconomic developments 32 Ministry of finance Managing the Government's Strengthen information treasury and developing the exchange with the State Bank payment system Ministry of Information Reflect the situation Continuous policy updates for and Communications accurately, objectively, communication truthfully Ministry of Science and Promote the development of Research and develop Technology electronic payment technology Ministry of Industry and Strongly promote the domestic market, expand Trade internationally Ministry of Justice Build and supplement a legal corridor Local departments Firmly grasp the policy content, implement consistent and synchronous policy implementation Macroeconomic stability from now until the end of 2022  The State Bank: closely monitor developments and make appropriate liquidity adjustments to make monetary policies, interest rate policies, and exchange rates The State Bank shall determine and announce the basic interest rate and the refinancing interest rate; on-lending according to credit records; discount, rediscount commercial paper and other short-term valuable papers; loans secured by pledge of commercial papers and other short-term valuable papers; determine and announce the exchange rate of the VND; stipulating the required reserve ratio for each type of credit institution and each type of deposit; buy and sell treasury bills, certificates of deposit, State Bank bills and other short-term valuable papers on the money market  Ministry of Finance: coordinate with the State Bank to develop and administer monetary policy; Managing the Government's treasury and developing the payment system; Coordinate in the development and inspection and supervision of financial markets 33  Ministry of Information and Communications: firmly grasp the situation, reflect the situation accurately, objectively, truthfully; create unity in the whole political system, trust and support consensus of the people to the guidelines and policies of the Party and State, the administration of policies of the Government, ministries and branches; in the spirit of sharing, overcoming difficulties together  Ministry of Science and Technology: promote the development of electronic payment means such as: e-wallets, mobile banking, internet banking; encourage and create a favorable environment for banks to transform digitally  Ministry of Justice: build and supplement a legal corridor to protect the non-cash payment system, to encourage digital transformation in banks and create trust for people to use electronic payment applications  Local departments: firmly grasp the policy content, implement consistent and synchronous policy implementation; based on their functions, tasks and powers, take initiative in handling them according to their competence; If exceed their authority, they must report to a competent superior Macroeconomic stability from 2023 to 2030  The State Bank: directs credit institutions to improve their financial capacity, administration, and development of modern banking services to meet integration requirements; reviewing, amending and promulgating a number of new regulations related to ensuring the safety of credit institutions' operations in a direction that is more consistent with international practices and standards and the actual situation of Vietnam; strengthen the inspection, examination and supervision of currency and banking and promptly handle violations; strengthen publicity and transparency in banking activities, strengthen inspection and supervision, especially remote supervision, detect and early warn risks in banking activities The State Bank will also closely monitor, supervise and timely forecast macroeconomic developments, domestic and international financial market developments to effectively serve the direction and management of operations, currency, banking  Ministry of Finance: strengthen information exchange with the State Bank on the financial market and state budget situation to jointly develop appropriate monetary policy 34  Ministry of Information and Communications: Continuous policy updates for  Ministry of science and technology: continuously research and develop communication, ensuring the policy has good access to people and businesses technology, which is the foundation for the development of the digital economy and digital banking  Ministry of Industry and Trade: strongly promote the domestic market, expand internationally, promote both supply and demand; step up the restructuring of the trade and service sectors, ensure absolute energy security, not to be short of petrol and oil, and operate according to the State's regulated market economy mechanism when necessary 35 Chapter 3: Feasibility in policy implementation Strength:  Proactive adaptation through digital transformation and application of science technology => The direction that the banking industry will continue to promote in the coming time: digital transformation, modernizing the payment system and banking operations, promoting the application of "contactless" transactions  Monetary policy is operated very flexibly => The State Bank did not use the tool to raise interest rates to regulate inflation (Inflation in Vietnam in the past few months is not due to money supply factors but mainly due to cost-push and supply chain disruption factors) Weakness:  This interest rate instrument also shrinks investment => restricting the  Ensuring the safety of banking operations and handling bad debts has not been competitiveness of the economy as well as of enterprises really effective Opportunity:  The global economy is recovering => Favorable conditions for domestic  Importing in moderation is beneficial economic recovery Challenge:  Inflation risk, the uptrend of basic commodity prices in the world  The trend of narrowing loosens, increases interest rates, and tightens the  The continuous appreciation of the US dollar causes importers to be currency disadvantaged because of increased input costs 36 EPILOGUE Monetary policy has proven to be important in stabilizing the domestic macro-economy in the face of a tense and volatile international trade situation What we need to is to build an appropriate and flexible monetary policy to regulate the economy, minimizing negative impacts from external factors At the same time, implement consistent monetary policy in the whole system from central to local ministries, credit institutions and businesses, aiming at the ultimate goal of economic development, improving improve people's living standards With the topic "Monetary policy stabilizing the macro-economy in the context of international trade tensions", our group hopes that the new points in monetary policy that we have proposed will be somewhat more complete than the policy monetary policy in our country in the period from now to 2030 Besides, the challenges and difficulties that we point out in the process of policy implementation will also be problems that ministries, branches and credit institutions use, businesses need to change and overcome in the near future Monetary policy can only maximize its effectiveness when there is a joint effort of all actors in the economy, so each individual and organization needs to seriously implement this issue 37 REFERENCES Báo Điện tử Chính phủ, “Duy trì giá trị VND giữ ổn định kinh tế vĩ mơ”, access link: Duy trì giá trị VND ổn định kinh tế vĩ mô, access on October 14th 2022 Tổng cục thống kê, “Thông cáo báo chí tình hình kinh tế - xã hội q III tháng năm 2022”, access link: Thông cáo báo chí tình hình kinh tế - xã hội q II tháng năm 2022, access on October 14th 2022 Tạp chí Tài chính, “Linh hoạt sách tài jhóa tiền tệ, thực hiệu mục tiêu kép”, access link: Linh hoạt sách tài khóa tiền tệ, thực hiệu mục tiêu kép, access on October 14th 2022 Tạp chí tài chính, “Điều hành sách tiền tệ cho thấy hợp ký linh hoạt”, access link: Điều hành sách tiền tệ cho thấy hợp lý linh hoạt, access on October 14th 2022 Thời báo tài Việt Nam, “Chính sách tiền tệ: Đã đến thời điểm nới room để hỗ trợ tăng trưởng kinh tế”, access link: Chính sách tiền tệ: Đã đến thời điểm nới "room" để hỗ trợ tăng trưởng kinh tế, access on October 13rd 2022 Báo Đầu tư, “Thống đốc: Nguy lạm phát tăng cao, áp lực với sách tiền tệ lớn”, access link: Thống đốc: Nguy lạm phát tăng cao, áp lực lên sách tiền tệ lớn, access on October 13rd 2022 Cổng thông tin điện tử Quốc hội, “Tọa đàm chun đề phối hợp sách tài khóa, tiền tệ, tạo nguồn lực ổn định kinh tế vĩ mô, phục hồi kinh tế”, access link: Tọa đàm chuyên đề phối hợp sách tài khóa, tiền tệ, tạo nguồn lực ổn định kinh tế vĩ mô, phục hồi kinh tế", access on October 12nd 2022 38 39