Financial security for vietnam financial market in international economic integration context

1 INTRODUCTION Significant of the research Vietnam, a developing and integrating country, from a low income country and has now become first level country of the middle income group Vietnam has the small financial and economic system, therefore, it is easily vulnerable with international financial, economic crisis and the hard of domestic economy To ensure the financial security, especially to ensure the financial security for the financial market is the top issue of Vietnam in the development and integration into the international economy For this reason, the Ph.D student has chosen to research the topic: “Financial security for Vietnam financial market in the international economic integration context” as his Ph.D dissertation Overview of the research + The first study: “Solutions to enhance the anti money laundering activities in Vietnam in the international economic integration context” + The second study: “Solutions to enhance the micro supervision activities for credit institutions in Vietnam in the international economic integration context” + The third study: “Some main solutions to ensure the financial security for the operations of Vietnam’s monetary market in the international economic integration context” These studies of the Ph.D student has been approved by the Board of Approval of the on 25 November 2011 On 22 March 2013, the Ph.D student has defended the dissertation at the basic level with the Board of dissertation at the basic level After announced with the result of the Ph.D dissertation at the basic level and received the comments from the Board’s members, the response of the Chair of the Board, the Ph.D dissertation has been further supplemented to become perfect The research objective + To deepening the scientific aspect of the financial security for the financial market; + To assess the actual circumstance of financial security of the Vietnam financial market, focusing on analyzing the financial security of the monetary and banking market, securities market, insurance market + Recommend the best solutions to assure the financial security for the Vietnam financial market Research methodology On the basis of materialistic dialectics method, historical materialistic method, statistics method, generalizing and factual researching at State Bank of Vietnam and some credit institutions, securities companies, study the documents of international organizations to conduct the analyzing, induction to find the best solutions for the research purpose Research scope and subjective Research in general the financial market, financial market’s security, focusing on researching the monetary and banking market and securities, insurance markets that are the major actors that affecting the financial market since Vietnam has become WTO member For the monetary and banking market, the Ph.D student focuses on researching the operating market between credit institutions and economic organizations, residents and other organizations 2 - The subjective of the research is the issue of financial security for the Vietnam’s financial market, taking the monetary, banking market, securities, insurance market to assess and evaluate Structure of the dissertation In addition to the introduction and conclusion, the dissertation covers chapters: Chapter 1: The theory basis for financial security of the financial market in the international economic integration context; Chapter 2: The factual of financial security of financial market, assessing, identifying, causing and lesson learnt; Chapter 3: The solutions for the financial security of Vietnam’s financial market in the international economic integration context CHAPTER THE THEORY BASIS FOR FINANCIAL SECURITY OF THE FINANCIAL MARKET IN THE PROCESS OF INTERNATIONAL ECONOMIC INTERGRATION 1.1 Overview of financial security of the financial market in the international economic integration context 1.1.1 The definition of financial security According to the Governor of the Central Bank of Turkey, financial security can be strengthening through the smooth operations of the existing system This is the general overview and covers the payment system, information techonology infrustrcture as well as management and supervision framework The financial safety and financial security are strictly linked Accroding the document titled the national financial security, theory, alert, policies issued by the finance publisher in Juy 2004 of the Professor, Ph.D Tao Huu Phung (chief editor) and the research documents of group researchers of State Bank of Vietnam and Ministry of Finance, the financial security can be defined as follows: Financial security is a basic concept to indicate a stable, secure, strong and no crisis financial situation Stability can be defined as maintaining the normal operations, no sudden and unpredictable changes However, it should be understood stability during the movement and development Stability does not mean trying to keep things unchanged but keeps stability during the move on process, no limit of improvements and perfectionism Security can be defined as the circumstance of no danger due to inner and outer influence Keeping security means not causing damage to ourself as well as preventing and against the outside attacking to damage If stability is the basic foundation, security is the core elements to regulate the movements of financial status Strengthening is the basic ground for stability and security, a weak financial status can not be kept stable and assure security Crisis is the final boundaries of losing financial security therefore; avoiding crisis is the top priority of any financial security solutions Together with being in financial crisis is finance unbalancing, meaning the payment liabilities will be over the payment instruments at a specific time Ph.D student has agreed with the financial security of the above researchers, however, this theory has only been in general mentioned in terms of “financial status” Therefore, with the purpose of improving the scientific and factual application of financial security, it is necessary to research in deep the financial market and finance sectors 1.1.2 Classifying the financial security 1.1.2.1 Classifying based on level and scope of management a National financial security; b Financial security of enterprise; c Individual financial security (inhabitants - family); 1.1.2.2 Classifying based on sector a Financial security of state sector; b Financial security of financial intermediary; c Financial security of enterprises and inhabitants 1.1.2.3 Classifying based on financial functions a Financial security in mobilizing financial source b Financial security in allocating financial resources c Financial security in utilizing financial resources 1.1.2.4 Classifying based on geographical a Local financial security; b National financial security; c Regional financial security; d Global financial security; 1.1.2.5 Classifying based on nature a Real financial security; b “Illusive” or formalism financial security 1.1.2.6 Classifying based on extend a High extend of financial security; b Secured financial security; c Unsecured financial security; d Lost in financial security; 1.1.2.7 Classifying based on financial market a Based on the market specialized, market security, debt instruments security; capital instrument security; derivative instrument security In general, the financial market operated on the basis of trading the financial properties; b Based on the market structures: primary market security and secondary market security; c Based on the time line of financial instruments: financial security of the monetary and banking market; financial security of capital market; financial security of secuirities market; 1.2 Overview of financial market 1.2.1 Theory of financial market Financial market is the market of financial instruments in which financial source will be transferred from the person with capital abundant to the lack one through purchasing, trading the financial instruments It can be understood simply as follows: the financial market is the place where the financial instruments are traded Financial market is the environment where the financial systems are operating The main functions of financial market are the process of transferring the capital from the abundant person to the lack one In the movement of the financial market there has been the participation of market supervisors with the purpose of creating the transparency, effectively operating market, minimize the operational risks of the financial market, maintain the stability, security for the market and promote the its development 1.2.2 Classifying the financial market The financial market is very complex and variety, each kind of financial market is formed and developed with its own main functions and purpose depend on the economic, social development of different countries, depend on the financial instruments and payment methods, different participants of the market 1.2.2.1 Based on the order of issuing, trading and structure of the market: financial markets are divided into primary market and secondary market 1.2.2.2 Based on the market specialized: the financial markets are divided into capital instrument market and derivative instrument market 1.2.2.3 Based on the time line of financial instruments: financial markets are divided into monetary and banking market and capital market 1.2.2.4 Based on the subject of the market, the financial markets include: + Borrowing and lending market of the government; + Borrowing and lending market of financial intermediary; + Borrowing and lending market of enterprises; + Borrowing and lending market of individuals; 1.2.2.5 Based on the operating criteria of the market Financial market is divided into monetary and banking market, security market, insurance market This method of dividing perfectly matches with the focus of the Ph.D research + Monetary and banking market is the place for short, medium and long term capital trading Monetary and banking market includes: - Market of mobilizing and lending capital of credit institutions to financial organizations, inhabitants, other organizations, individuals (often referred as first): - Market of borrowing and lending among credit institutions (often referred as second) - Market of borrowing, buying, selling between central banks and credit institutions (often referred as third) + Securities market means the market where the buying and selling securities activities occurred Taking into consideration the nature of the market, the securities market is the place to relocate the capital from the abundant owner to the needed one in the concentrated and no concentrated market economy, + Insurance market means the market that occurring the buying and selling insurance products The insurance market includes the life insurance market and non life insurance market 1.2.3 The inter-relations between the elements establishing the financial market The markets that contribute to the establishment of the financial market have a strictly interrelations, specifically the major markets that are the monetary and banking market, the insurance market The monetary and banking market has become more consistent with the capital market in the operation of the national financial market and has been globally The vulnerability of the economy will affect this market and then, in turn, will immediate affect the other markets Nowadays, together with the development of the global economy, the operations of the financial market is becoming more and more complicated, sophisticated, the financial instruments have been strictly interrelated, the markets are inter reacted and influenced, the border line of the different markets are only relatively, the financial instruments are moved inter related among the markets, inter transferred Financial market is the being influenced directly by the financial policies, monetary policies to obtain the target of the economy 1.2.4 The instruments of financial market + The debt securities include bonds, bill of credit, commercial bills and other receivables + Capital securities are often called as shares, equivalent to the amount of shares owned in the enterprise 1.3 Financial security within the operations of the financial market Financial security of the financial market means the financial security of the markets that contribute to the financial market includes monetary and banking market, securities market, insurance market It is the stability, safety, developing manner and ability to against the crisis of the monetary and banking market, securities market, insurance market Besides, the elements that affect greatly the financial market include the public debts, meeting the standard of anti money laundering of nations and financial institutions 1.3.1 Financial securities for the operation of monetary and banking market 1.3.1.1.Therory of financial securities for the monetary and banking market + To assure the financial security for the operations of monetary and banking market means to assure the financial security for the following markets: * The market to mobilize capital and lending of credit institutions to individuals, financial institutions and other institutions (referred as the first market) * The inter borrowing and lending market of credit institutions (referred as the second market) * The lending and buying, selling market among central banks and credit institutions referred as the third market) Financial security for the operations of the monetary and banking market is the basic definition indicates the stability, safety, development and not being crisis during the operation of the monetary and banking market 6 1.3.1.2 Affecting factors and standard of financial security of the monetary and banking market operations a Affecting factors a1 Stabilize the operations of the monetary and banking market *) Stabilize the operations of the first market + Stabilize the capitals; + Stabilize utilizing capitals; *) Stabilize the operations of the second market *) Stabilize the operations of the third market a2 Secure the operations of the monetary and banking market *) Secure of the first market + There has been many factors in which the major ones required the credit institutions to meet in order to secure the operations of the credit institutions include: • Capital adequacy ratio; • Credits margin; • Debt service coverage ratio; • The margin of capital contributions, buying shares; • The rate of credit granted compared with capital called up In addition, with the developing requirements of countries and over the different time, the requirements of the security for the operations of credit institutions should be added or changed in increasing trends *) Secure for the second market To assure the operations of this market in the competition means identify the liquidity of the market, conditions to borrow and pay debt comply with the security policies of the system to assure the banks, non financial banking institutions operating in accordance with the market regime but also being controlled and monitored by the central banks *) Secure for the third market This is the buying and selling activities between central banks and credit institutions As the stability of this market, the security in a broad meaning is creating the safety for the policies of stabilizing the value of money, safety for the operations of credit institutions, not simply means safety (receive all the money once selling valuable papers or receive all the amounts and interest once giving loan…) a3 Develop the operations of the monetary and banking market *) Develop the first market *) Develop the second market *) Develop the third market a4 Increase the ability to prevent the crisis of the monetary and banking market Crisis is the final limit of lossing security for the monetary and banking market The monetary and banking market is systematic and highly inter affected Therefore, the first market is the highly important one for the safety, stability and development of monetary and banking market In conclusion: financial security for the operations of the financial market is a stable status, safety, development and avoid of crisis of the monetary and banking market b The indicators to reflect the security of financial stability for the monetary and banking market b1 Capital adequacy For the credit institutions operate internationally, these procedures at least not lower than the requesting ratio of capital respectively stipulated by Basel (at present not less than 8%) The capital separate ratio and combined risks means the rate of combined capital should always ≥8% (Basel regulations) To assure the financial security, most of the countries request the minimize rate must be higher than 9% According to PH.D research point of view, this rate should always higher than 10% for every credit institutions to assure the safety of the credit institutions b2 Credit limitation to assure the financial security + The total of outstanding debts of a credit institution for a customer should not be over 10% of capital owned of credit institutions (safety margin should not be over 15% common in many countries) + The total of outstanding debts and the outstanding of grantee of credit institution for a customer, in the point of view of Ph D student it should not exceed 20% of the owned capital of credit institutions (the safety margin is 25%- common in many countries) + The total of outstanding debts of credit institutions of a group of customer should not exceed 45% of the owned capital of credit institution (the safety margin is 50%- common in many countries) + The total of outstanding debts and the outstanding of grantee of credit institutions of a group of customer should not exceed 55% of the owned capital of credit institution (the safety margin is 60%- common in many countries) b3 The ratio of ability to payment to assure the financial security + The minimize ratio under the PH.D research point of view is 20% equal the total of current assets payable immediate divided the total payable liablilites (the safety margin is 15%- common in many countries) + The minimum ratio equal to 1.5 times of the total amount of current assets payable within days since the next day and the total liabilities payable within days since the next day (under the point of view of student), This ratio is adequacy, in many countries the common is b4 Limited capital contribution and share purchase + The capital contribution of the credit institution in a enterprise, investment funds , investment projects , other credit institution shall not exceed % ( in view of the PhD student) The safety ratio shall not exceed 11 % as usual + The total capital contribution and share purchase of a credit institution and its subsidiaries, joint ventures, associated companies of credit institutions in the same enterprises, investment funds, investment projects, the other credit institutions shall not exceed % of the charter capital of enterprises, investment funds, investment projects other credit institutions ( in view of the PhD student) Adequacy ratio of 11% as usual + The total capital contribution and share purchase of credit institutions in all the subsidiary companies shall not exceed 20 % of charter capital and reserve funds ( in view of the PhD student) As usual safety is 25 % b5 Credit ratio of total capital mobilization + For the Bank only used the mobilized capital to finance credit and after credit is provided should ensure the affordability and safety ratio should not exceed 80 % for each bank and the average of the commercial banking system + For the non financial credit institution shall not exceed 85 % for each of the non financial credit institutions and for the whole system 's average , the non financial credit institutions b6 The ratio of overdue liability to total outstanding loans This ratio is always less than 5% at any time for each credit institution and the system's average credit institutions Ratio of financial security of overdue liability (NPL-Non-Performing Loans) is always lower than 3% for each credit institution and for the whole system b7 Percentage of the profits earned by credit institutions and the whole system is always greater than 1% over the year Each credit institution must continuously be profitable All systems have gained increasing interest maintained through the years A credit institution losses, that credit institutions loss financial security Even credit institutions losses or reduced profits compared with the previous year, will also lead to financial insecurity of the whole system c The indicators to evaluate the endurance credit shocks of credit institutions on the financial markets For each specific risks in banking operations, there has been different technical endurance testing The following risks are common risks that supervisory, inspection and management agencies, the bank to measure to evaluate in order to avoid the crisis can happen to the monetary and banking market: + Credit risk; + Interest rate risk; + Exchange rate risk; + Liquidity risk; + Risk interbank spreads Each kinds of risk have different technical endurance testing and request different data c1 ST on credit risk + The method is based on the provision + ST macro approach c2 ST on interest rate risk + Method of gap analysis revaluation + Method of analysis period c3 ST to exchange rate risk + direct ST method with the exchange rate risk c4 ST on liquidity risk + The method is based on the balance sheet + Approach based on the period (cash flow method) c5 ST to spread risk + ST method for the risks of inter banking + ST method to spread macroeconomic risks 1.3.2 Financial Security for the securities market 1.3.2.1 The definition of financial security for the securities market Similar to the monetary and baking market, financial security for the operation of the securities market is to ensure market operate stable, secure, developing and avoid of crisis for the market activity The nature and content of: stability, security, development and non crisis will be identified in the concentrated market, decentralized market and market participants in the securities market 1.3.2.2 Financial security factor for the operation of the stock market a Stable operation of the ssecurities market b Safe operation of securities markets c Develop the activities of the securities market d Enhancing the ability to prevent the crisis of the securities market Thus, to prevent the crisis of the market, there should be macro policies to stabilize and develop economy to avoid economic crisis In addition, it is necessary to avoid the negative effects of economic crisis from the outside , stabilize and develop stable the primary market (release market) , the secondary market (the market for trading the released securities), strictly control the activities of participants in the securities market such as stock trading center, companies issuing securities , the securities trading companies, investors, speculators 1.3.2.3 Financial security factor for the operation of the securities market 1.3.2.3 The principles, international standards for monitoring securities trading activities, the indicators reflect the financial security of the securities market a The principles and standards of international securities trading activities The principle is directly related to the financial intermediary institutions participating securities market, include: + The supervisory agency has to ensure minimum conditions for market access for market intermediary institutions while ensuring fairness to these organizations The purpose of monitoring is to reduce the risk of loss causing to investors due to the error or illegal behavior or capital inadequacy of the financial intermediary + Must have requirements on initial capital and capital in the business process, the safety regulations reflect the risks that the financial intermediaries may encounter + The financial intermediary must comply with standards for internal structure, professional operations to protect the interests of investors and appropriate managing risk + There must be provisions on bankruptcy procedures of financial intermediaries in order to minimize losses to investors and risk control systems b The indicator reflects the financial security of financial institutions participating securities market + Develop financial safety indicators based on the criteria applied to the banking system on the principles of Basel I and Basel II European Union system has been applying these principles for the financial institutions participating in the securities market Securities 10 trading organizations must always meet: Self financing captial I + Self financing ≥ 8% captial II Total assets at risk To meet financial security standards the PhD student believes that this ratio should always greater than 9% + Apply the method of capital net (Net Capital Approach) The minimum of net capital maintained of securities companies is 2% of total customers’ loans and will receive a warning if the level is lower than 5% In view of the PhD student, the minimum ratio to ensure financial security should not less than 5%, according to a warning by the U.S supervisory agency 1.3.3 Financial security for the insurance market 1.3.3.1 The concept of financial security for the insurance market Thus, financial security for the insurance market is to make markets operate safely, stabile, developing and avoid the impact of the market crisis 1.3.3.2 The principles and international standards of supervising insurance business ICP includes 28 principles ICP with cluster with the following main topics: + The principle of cluster to ensure the conditions of effective supervision, including principles for effective supervision; + The principles of cluster monitoring system from principles to 5; + The principle of cluster being monitored from principle to 9; + The principle of cluster being monitored the activity from principle 10 to 15 The principle of the prudential supervision, from principle 15 to principle 23 + The principle of cluster markets and customer, including the principles from 24 to 27; + Cluster on anti-money laundering and combating the financing of terrorism in the principle 28 1.3.3.3 The criteria ensure financial security for the operation of the insurance market For the direct supervision of solvency, in some countries based on the provisions of "solvency margin" (Solvency margin), in some other countries apply the "risk-based capital "(risk-based capital) The supervisory agency requires the company to maintain this ratio is not less than 100% in order to meet capital adequacy requirements This ratio is being calculated as follows: Variable ability to make payments ≥ 100% Coefficient of solvency margin = Solvency margin standard Self financing capital = In view of Ph.D student, to ensure the financial security of the system, this ratio must be ≥ 110% (absolute safety area is 10%) For the second method of "risk-based capital", the minimum amount of capital to compensate for the risks that insurance companies face will be calculated based on the degree of risks 11 CONCLUSION OF CHAPTER Thus, financial security for the financial markets means to ensure the stable, secure, devlop and non crisis of market’s operations The financial market consists of a variety of markets operating together of which, particular importance is the operation of monetary and banking markets, ssecurities market, insurance market to be stable, safe, developing and prevent the crisis that will create the conditions to ensure financial security for the financial markets The monetary and banking market, securities markets, insurance markets have tight relationships with each other, the operations of this market will ensure that financial security will have positively impact on the security of other markets and vice versa, once this market not ensure financial security, it will have negatively impact on other markets and have negatively impact on the operations of financial markets nationally as a whole and in some cases could adversely affect the financial markets of the region and negatively affect global financial markets With this special meaning, the solutions of financial security for financial markets is of important to secure financial security for every country , contributing to the security for global financial markets Monetary and bank market including the first, second, third market, market of which the first market plays a decisive role To ensure financial security for monetary and banking market, each component market have to ensure adequate factors and indicators to ensure financial security for safety, stability, development and prevent crisis + Criteria to ensure financial security for monetary and banking market including criteria for minimum capital adequacy for organizations and the whole systems, criteria of credit limit and the ratio of solvency payment; limit of capital purchasing equity; the rate of total granted credit of the total capital mobilization; maximum limit on overdue loan ratio, rate of profits The criteria to assess the stamina of each organization participating in the market and the system as a whole to ensure the system can avoid the effects of the crisis + The factors that affect the financial security for the securities market including: security, stability, development and ability to prevent a crisis The indicator reflecting financial security for financial institutions participating into securities market also include ratio of minimum capital, the ratio of net capital to meet the market liquidity +The factors that affect the financial security for the insurance market include the following factors: safety, stability, development and crisis prevention capabilities…The factors affecting financial security for financial institutions participating in the insurance market including the minimum criteria of solvency margin, the criteria of minimum capital The monetary and banking market, ssecurities market and insurance market operate consistently within the financial markets Today, financial markets are highly interconnected globally both in volume and value of transactions, thus, the country needs global solutions to prevent criminals using financial markets to commit crime, to launder money CHAPTER THE FACTUAL FINANCIAL SECURITY OF FINANCIAL MARKET, 12 ASSESSING, IDENTIFYING, CAUSING AND LEASON LEARNT 2.1 Overview of Vietnam financial market By the end of 2012, total assets of the Vietnam’s financial system are 5,675 trillion, equal to 213.2% of GDP, of which the total assets of the banking sector were 5,502 trillion VND equal to 206.7% of GDP in 2012, the total assets of the securities companise are 82 thousand billion N|VND and equal to 3.1% of GDP, the total assets of the insurance companies are 108 trillions of VND and equal to 4% of GDP By late 2012, the stock market capitalization is equal to 26% of GDP in the year 2012 2.2 The factual financial security of financial market, assessing, identifying, causing and lesson learnt 2.2.1 The factual financial security of Vietnam monetary and banking market, assessing, identifying, causing and lesson learnt 2.2.1.1 The factual financial security of Vietnam monetary and banking market Up to present, the credit institution system in Vietnam comprises of 125 institutions and braches of foreign banks, cooperative banks and local credit funds include: + 05 state commercial banks and state join stock commercial banks + Bank for Social Policies; + Vietnam Development Bank; + 35 Joint Stock Commercial Bank;; + 05 Joint Venture Banks; + 05 100% foreign capital banks; + 44 branches of foreign banks; + 17 financial companies; + 12 financial leasing companies; + Cooperative bank; + 1110 local credit funds; As the operational scale of monetary and banking market is now quite large now compare with the entire operation of the economy, ensuring financial security for the operation of the Vietnam monetary and banking market means ensuring the stability, safety and development for the vital market to stabilize and develop economy 2.2.1.2.Assessing, identifying the financial security of the Vietnam’s monetary and banking market, causing and lesson learnt In recent years, Vietnam's banking and monetary market are not highly stable operated due to the impact of unfavorable factors of global macroeconomic and Vietnam’s internal economy Taking into consideration all the factors to ensure financial security for Vietnam’s monetary and banking market in recent years, that are stability, security, development and against the crisis of the outer or inner of the economy, then these factors are fragile, unstable Especially bad debt of credit institution if calculate properly and adequately, it is in fact over 17% of total loans (more than 464 trillion VND, equivalent to more than 23 billion U.S dollars) Vietnam's banking system is of large scale and rapid growth compared with GDP over the years; in December 2007, the total assets of the banking system has only reached 80.5% 13 of GDP, in December 2012 it has reached 184 , 7% of GDP; loans has increased respectively compared with GDP from 63% to 101% of GDP + Most of the capital in the banking sector owned by the Government, directly or indirectly + Banking system with a high degree of cross-ownership between banks and between banks and businesses + Vietnam banking system operating with low level of information transparency + Separating the cross-ownership and investment process, borrowing and lending among corporations owning banks or securities companies, insurance companies, finance companies, finance leasing companies, the capital adequacy ratios ( CARs ) of a number of banks have not met the minimum capital requirement of 9% + There has been a high credit growth of 53.89 % in 2007 to 9.14 % in 2012 that has created a shock to the industry, and causing a great impact on the high bad debts as well The high non performing loan in the construction resulting in many under progress’ construction projects being prolonged, low investment efficiency, the total debt to build this based constructions are of about 100 trillion VND; difficulties in manufacturing, trading, goods consumption; high inventory, securities market, real estate market declined sharply and prolonged stagnation… The lesson learnt from the fact + To ensure financial security for Vietnam’s monetary and baking market, firstly, must determine and identify strategic roadmap publicly to regulate the macroeconomic policy , especially monetary and fiscal policy to be stable, strong, flexible, avoid any shock arise (increase , decrease dramatically ) + Develop the monetary and banking market in the direction of safety, efficiency, binding strictly between domestic and international market, take gradual step towards a transparent market operations, promote domestic capital in combination with oversea fundings, towards meet the global standards to apply in Vietnam 's banking system to be full compliance with Basel I, Basel II and Basel III’s principals + Enhance the role of supervisory and inspection agencies of the monetary and banking market, making the information regarding the supervision and inspection transparency to create stabile and developing market pressure 2.2.2 The factual financial security of Vietnam’s securities market, assessing, identifying, causing and lesson learnt 2.2.2.1 The factual financial security of Vietnam securities market, assessing High number of securities traded, however, the quality are low, the market products are not variety yet + About the investors: The bases of investors are unstable due to lack of organized investors acting as a foundation The insurance companies have invested in the securities market as organized investors but in a small-scale investments The credit institutions involved in the securities sector in the forms of bond investments, capital contributions to form securities trading organization, investment trust, however, the risk management is still limited + About arranging securities trading and services: Numbers of organized trading securities but low scale and low financial capacity, not 14 guarantee the performance, having potential systemic risk + About organization markets: The maintenance activities of the two stock exchanges have contributed to the development of the securities market in recent years, but at present this has made the securities market being divided The specifically bond market has been established and operated at the Hanoi Stock Exchange, but mainly government bonds The value of government bonds listed with more than 160 trillion VND but there has been too many bonds 2.2.2.2 Rating, comments on the financial security of Vietnam's securities market, the causes and lessons + Vietnam stock market is a new and small market, the coordinating role and provides medium and long-term capital for the economy is still limited + Small root to form the securities market but underline the lossing financial insecurity mainly because of weak economic, difficulties facing of enterprises, enterprise’s high bad debts that led to an increase to record of bank loans in decades, high inventory, reduced consumption, the frozen real estate market, the impact of the world economic crisis + Lesson learnt from the operations of Vienam securities market: The market should be developed stably, control strictly the standard to issue enterprise’s bonds, stocks, make listed enterprise information more transparency comply with the controllable standards, supervising the market in the direction of cooperating supervise the money flows, supervise the monetary and banking market, securities market, capital market by supervising the cooperated capital 2.2.3 The reality of financial security for Vietnam's insurance market 2.2.3.1 Status of financial security for the operation of the insurance market in Vietnam By June 2013, among of 58 insurance companies and insurance brokerage business, therer has been 29 of non-life insurance companies, 15 life insurance companies, 12 insurance brokers, 02 reinsurance companies Overall compared with nearly 90 million people and GDP and compared with the financial markets, the Vietnam insurance market is small (total assets of the insurance company by the end of 2012 Vietnam has only reach 4% to GDP ) The regulations on safety indicators still sketchy, not fully meet international standards of governance, supervision of insurance markets Currently, the insurance market is not been in any incident of insecurity, instability However, in the long term, to sustainable development Vietnam 's insurance market, it is necessary to establish the financial security factor to ensure the stability, safety, standards development and risk prevention of the market to avoid the impact of the crisis on the financial mark prevention of the market to avoid any impact of the crisis on the financial market 2.2.3.2 Evaluation and assessment of financial security for Vietnam's insurance market + Compared with 10 countries of Southeast Asia, by the end of 2011, Vietnam's economy is 6th, total insurance assets also at the 6th At this point, the total assets is of about 4.2% of GDP and equal to 1.9% of the total assets of the financial system in Vietnam, the total cost of life insurance and non-life is of about 1.85% GDP and over years, from 2007 to 2012, the growth rate over each year 15 were in double digits The premium is low due to low per capita income and demographic characteristics, but compared to other countries in the region such as Thailand, Indonesia, Malaysia, Philippines, Vietnam has many potential development + Thus, the Vietnam insurance market in its infancy, a small market compared to GDP and financial system (compared with the total financial system, the assets over the years: (2007:2,6%; 2008: 2.8%, 2009: 2.5%, 2010: 2.1% and 2011: 1.9%) The insurance activity does not have a great effect on the Vietnam’s financial market The insurance regulations were initially formed and supervisory standards have been applied To develop sustainable insurance market, there should have in place policies to encourage, promote as well as management mechanisms, appropriate supervision, to ensure market development is secure, stable and avoid being affected by negative impacts CONCLUSION CHAPTER In the process of international integration of Vietnam, financial market has developed at quick scale and high speed During the development of the monetary and banking market the stability is not high yet, sustained inflation in years has created uncertainty for the macro economy, many businesses have difficulties in production due to high interest rate of bank loans, delinquency of banks tends to increase, some banks liquidity constraints, a number of banks have merged or restructured with largest bank or there must be direct intervention of the State Bank Especially in this context, economic difficulties, increase in bad debt of banks are the causes of destabilizing markets and if it is not well handled, it will easily lead to the crisis of monetary and banking market and will create crisis on the financial market in Vietnam About the structural characteristics of Vietnam's financial market, monetary and banking market accounts for the majority of (always around 200% of GDP and nearly 90% of the whole market)… However, Vietnam’s monetary and banking market are basically not high stability in operation, low security and difficulties in development, easy to be in a crisis due to an increase in overdue debt of commercial banks Vietnam's securities market have been developed since 2000, but there has been unstable in operations, unsafe and uneffective The insurance market is small, does not have much influence on financial markets Regarding the government's public debt, it has still maintained the level of safety and international standards on management of Vietnam's public debt, thereby the financial markets has been stabilized About implementing measures on anti money laundering in particular and anti crime in general, it has not met all international standard, therefore, Vietnam financial system is easy to be abused by criminals to launder money and commit crime, therefore, create a great loss for the financial market Especially, at this time, Vietnam is in the public statement of FATF, the financial market encounter with difficulties in conducting international financial transactions CHAPTER SOLUTIONS FOR THE FINANCIAL SECURITY OF VIETNAM’S FINANICAL MARKET IN THE INTERNATIONAL ECONOMIC INTERGRATION CONTEXT 16 3.1 Orientation for Vietnam’s financial security of financial market in the international economic integration context 3.1.1 Strategic orientation of financial market development Synchronously developing markets, restructuring financial markets and financial services and expand and diversify the forms of market activity to mobilize domestic and foreign resources for economic and social development; Restructuring commercial banking system Vietnam towards safe operation, stability and development Focus on developing ssecurities markets to be stable, solid, efficient, safe in operation, ensure the legitimate rights and interests of the participants in the market, able to compete regionally, promote the development of the bond market including government, local government bonds and corporate bonds.\ Develop the insurance market to meet with 90 million of populations, develop different types of insurance 3.1.2 Orientation of financial security of Vietnam financial market Develop and full implement legal basis on the oriented market economy and international integration of financial markets, including the legal basis of the monetary and banking market, securities market and insurance market in 2015, completing the plan of restructuring commercial bank system in Vietnam, ensuring that 100% of Vietnam's commercial banks have reached the minimum equity to total assets is 9%; the banks are standardized risk management to meet with Basel II standards, banks have meet requirements on minimum risk include a full range of risk, credit risk, market risk, liquidity risk, operational risk, reputation risks All commercial banks in Vietnam have to issue and the full implemented the provisions on control and internal audit All professional processes, business processes of the commercial banks have to ensure to be adequate managed and independent in terms of before, during and after implementation Fully develop market economy mechanisms for the integration of securities markets and insurance markets Encourage indirect foreign investment on Vietnam’s securities market, insurance market, for example, can allow foreign investors to hold up to 49% of enterprise, in special situation, can allow foreign strategic partners to hold over 49% of enterprises even include securities companies, insurance companies However, there should be technical solutions, policies and strategies in place to meet the principles of integration, but aslo minimize the massive withdrawal of capital out of Vietnam market when there are adverse changes or crisis occurred 17 3.1.3 View point about financial security for Vietnam’s financial market Two major views about financial security covering the financial market development in Vietnam is: + Build and develop adequate financial markets: The safety, stability, development and avoid the impact of the crisis and the impact of external direct impact from the intrinsic economy for each participating organization into the market and for the whole financial market system + The Vietnam commercial banks are required to meet with Basel II standards before 2015 and Basell III standard before 2020 Both the commercial banking system Vietnam must achieve a minimum of risk management before 2015 + The non banking fnancial institutions including financial companies, and leasing companies, all have to meet the criteria and standards of Vietnam’s governance, management and control standards and the international standards, respectively + Securities companies, insurance companies, fund management companies have to meet the international norms and principles of Vietnam before 2015 + The financial organizations, commercial banks system, securities companies, insurance companies must meet criteria to ensure financial security before 2015, namely: • The indicator reflecting financial security for monetary and banking market including capital adequacy ratio, credit margin to ensure financial security, affordability ratio to guarantee financial security, limited capital contribution, share purchase, the ratio of credit to total mobilized capital, overdue debt to total debt, the rate of profits, the evaluation index endurance of the credit institution shocks in financial markets • The indicators reflect the financial security for financial institutions participating securities market, include: the safety index by Basel I and Basel II, the indicators of self financing, indicators net capital to meet liquidity • The indicator reflecting financial security for financial institutions insurance market participants, including: co-solvency margin, the total minimum capital Enhance capacity and effective monitoring, inspecting financial markets, towards full application of international standards on the the principles of respecting market rules In the short and medium term, financial markets need to address these two fundamental issues: + Measures to address the outstanding loans over the years to bring back the bad loans at safe level for the entire financial system and for each financial institution and ensure effective Ensure new invested financial flows in the economy contributed to economic growth and create effective and positive impact on the process of consolidation and restructuring for the whole the financial system and for each financial institution 18 (banking, securities, insurance ) 3.2 Solutions to ensure the financial security for the operations of the Vietnam’s financial market in the international economic integration context 3.2.1 Ensure the financial security for the operations of the Vietnam’s monetary and banking market in the process of international economic integration Develop and promulgate monetary policy which is stable, highly concentrated targeting at controlling inflation, stabilizing the currency value To improve the stability and operational safety of monetary and banking markets, it is necessary to build and improve a number of key measures of macroeconomic stabilization policies + State Bank of Vietnam issued regulations on minimum risk and require credit institutions and organizations to implement and conduct strictly supervision + State Bank of Vietnam issue policies to encourage joint-stock banks to seek develop foreign strategic partner to increase the financial capability and application of modern technology, and management experience in operating risk management + Group of measures to improve the financial capability: Request credit institutions to meet capital adequacy ratio at least of % of the own capital to total assets which has been adjusted the risk of credit institutions (capital adequacy ratio separately) + Group strengthening the leading role of state-owned commercial banks : Continue reform, innovation state-owned commercial banks , such as ; + Solutions to create a favorable environment for banking operations: Complete appropriate system mechanisms and policies to facilitate the efficient operations of commercial banks + Limit the opening in massive of commercial banks branches, particularly in areas where have been “density of braches", priority to develop branches in disadvantaged areas, undeveloped + Innovate the supervision of banking and non financial institutions based on modern technology and international practices in line with the real situation in Vietnam, including: * Develop processes, content and technology applications in micro-monitoring activities * Develop processes, content and application of modern information technology in monitoring system of macro-credit institutions * Develop information technology systems rating credit institutions in accordance with Camels * Develop information systems technology to analyze and build different warring and arlert system for each credit institution to have policies and timely measures to avoid affecting the entire system * Develop processes, systems, and application of information technology to manage supervision programs, combined between onsite and offsite supervision + Change from planned inspections of any specific cases, branches into legal inspections to evaluate in general, risk management, safety level of a credit insititution The system of internal control is established by the executive committee through the operational procedures to ensure the transactions are fully calculated, guaranteed transactions risks are appropriately considered and ensure that policy and strategy developed by the board is respected 19 To ensure financial security for Vietnam forex market, a specific solution is to have in place the policies to stable the exchange rate to encourage exports to attract foreign currencies, encourage foreign investment, encouraging policy to expand remittance services, state policies on foreign exchange and foreign exchange risk management, policies on foreign exchange risk applies to banks, financial non banking institutions Restriction to gradually end its mobilization and lending in foreign currencies, switch into exchange trading mechanism For safety management, effective investment of country’s foreign exchange reserves, to determine the structure of a reasonable reserve in accordance with the balance of import and export, the balance of funds related to the strong currency easily in conversion such as the U.S dollar, EU dollar, UK pound, Japanese Yen area identify and accurately calculate the portfolio, the largest bank with eligible standard, central bank and government bonds with high- ranking in order to avoid the risk of irrecoverable and hedging fluctuations of exchange rates of currencies In summary: key measures to ensure financial security for the operation of the monetary and banking market in Vietnam in the international economic integration context requires the following solution: improve the stability and operational safety all of the three market (first market, second marke, thrid market) + In addition to the measures mentioned above, at present and in the long term, effective solutions to handle bad debt and limit bad debt increases in the credit system in the future very important to ensure financial security for Vietnam financial market today and in long term In general: “Ensure the financial security for the operations of Vietnam’s monetary and banking system in the international economic integration context” means ensuring the stability, safety and development of the market In the opening market economy, monetary and baking market has international characteristic in terms of the continuity and high impact among credit institutions Therefore, the solution to ensure financial security for the operation of monetary and banking markets must meet the stability, security and development for each credit institution and for credit institutions system as a whole The main measures to ensure financial security for the operation of the monetary and banking market in Vietnam in the international economic integration context, such as: developing and issuing monetary macro stability policy, forming and implementation of security policies in the operations of the credit institution; improve the efficiency of the inspection and supervision of credit institutions and enhance risk management in the credit activities of organization's, solving any abnormal activity of credit institutions, preventing and combating banking criminals, develop linking solutions, build and implement solutions to improve the stability and operational safety of monetary and inter-banking market (second market) and the third monetary and banking market In addition, the portfolio of banks, financial institutions and non-banking institutions in other banks should have to be regulated on managing and close monitored to ensure all portfolios of banks, the financial non-bank institutions should have in place investment and monitor regulations Especially at present, high overdue debts, bad debt settlement is of important solution to make overdue safe level less than 3% of total loans 3.2.2 Some main solutions to ensure the financial security for the operations of 20 Vietnam’s securities market in the international economic integration context + Develop and implement stable and developing macroeconomic policies: In short, developing and implementing macroeconomic policies to develop and stable macroeconomy, stable the society and security for Vietnam as the most important solution to make the operation of the stock market our country's stability and development + Develop, promulgate the implementation of laws, the securities and the securities market in Vietnam + Establish securities market regulation to fully regulate the release, circulation, control, monitoring market + Form regulations on the management and supervision of the secondary market in Vietnam (as of the market between buyers and sellers of securities have been issued in the primary market) + In every country there are policies to encourage development of the securities market in particular In Vietnam it is necessary to focus on tax policies to encourage market development + Increased real demand for the stock is considered as a main financial asset in order to create the kind of stocks and bonds that can be traded, pledge to hold short and long term, high liquidity as the other financial property under the law Thus, to develop and stabilize Vietnam's securities market, the State should have appropriate tax policies to encourage the development of the securities market, creating favorable conditions for a legal basis to encourage activities of trading, pledging, liquidating, settlement, custody of qualified securities into financial assets easily and conveniently + Any developing country the securities markets are also required to develop and complete the stock legal framework, the system of monitoring the stock market Complete the legal basis for monitoring the Vietnam stock market + Develop technical infrastructure investment to ensure that high-tech surveillance since the stage of issuance, circulation and settlement, depository, underwritten securities + Structuring goods in stock market towards improving the quality of issuance, listing and registration transactions and develop new quality of goods for the stock market, raising the criteria for listing securities, especially criteria on profitability, timeline for operations and corporate governance in accordance with international standard and practices under the criteria for market structure; improve corporate governance mechanisms Restructuring the investor towards diversify the investors basis, open the organized and professional investors basis, establish the framework to allow the establishment and operations of securities companies + Classification of securities business organizations to implement restructuring to suit each group 3.2.3 Financial security for the insurance sector in Vietnam + Establish the mechanisms and policies on doing business in insurance to be full , transparent , fair and consistent, facilitate of market development, full implement of international commitments 21 + Impove the safety operational efficiency and competitiveness of the systems, develop insurance companies to be strong in finance, management capability, operating to meet with international standards, efficient in operation, create ability to compete on the domestic market as well as the region + Encourage and support the diversification of business insurance products to meet the diverse insurance needs of organizations and individuals + Diversification and establishment standards for brokerage agencies, insurance agencies to create an effective bridge between the insurer and the customer + Build process of monitoring and inspection, professional management and insurance management, insurance supervision to ensure principles of management and supervision of insurance 3.2.4 Some solutions to ensure the financial security for the national debt in Vietnam 3.2.4.1 Enhance the effectives of public debt 3.2.4.2 Control strictly the rate of public debt 3.2.4.3 Improve revenues, foreign currency reserves to increase the ability of repayment of the economy 3.2.4.4 Develop a plan based on the public debt in line with economic social development plans, revenue and spending plans, the state budget in each period, time, publicity, transparency and clear responsibilities in explaining the management of public debt 3.2.5 Solutions to enhance the anti money laundering activities to ensure the Vietnam’s financial security in the international economic integration context 3.2.5.1 Fulfill the legal framework to meet with domestic and international requirements a) Enact the Law on Anti Money Laundering and amend the Penal Code to meet with domestic and international standards b) Establish and issue legal documents on anti money laundering to stipulated in details the law on Anti Money Laundering 3.2.5.2 Improve and enhance the operations of institutions responsible for anti money laundering include banks, financial institutions, financial leasing companies, securities companies, insurance companies 3.2.5.3 Increase domestic cooperation in anti money laundering 3.2.5.4 Increase international cooperation on anti money laundering 3.2.6 Recommendations to the National Assembly, Government, Prime Minister, and ministries, agencies *)For the National Assembly: Passage the supplement of the Penal Code with articles related to anti money laundering, criminal liability of legal person, issue regulations on identifying customers and customer due diligence responsibilities soon to meet with international standard *)For the government: • Direct ministries, agencies to have drastic solution to deploy bad debts; direct the implementation of policies with high unity, efficiency and safety ; • Direct the implementation of decrees and regulations issued by the asset management company to assist the deploy bad debts; run effective the operations of the 22 company, well-supported banks for processing loan, sale of assets • Increased synchronization solution both monetary and fiscal policy to support enterprises to quickly get out of recession • Amend the decree on issuing corporate bonds to be more strictly in principles and conditions (the current regulations require profit per year, however, it should be raise up consecutive years of profit of newly issued bonds) • Develop and approve, implement soon the project against dollarization towards shifting the relationship between credit institutions and private organizations and businesses from borrowing foreign currencies into trading one • Accelerate the equitization of State enterprises *)For the Prime Minister: • Decision on the reestablishment of Banking Supervisory Agency in the direction of more consistency from the central level to the local level • Issuing the decision on the cooperation of Banking Supervisory Agency and State Securities Committee, General Department of Insurance Supervision and Management • Increase the role of the National Steering Committee on Anti Money Laundering to direct ministries and agencies to issue their own plan to implement the National Action Plan of the Government in 2011, 2012 and the following years • Direct the ministries, agencies to issue the detailed guiding documents under their power on anti money laundering, increase the supervision on anti money laundering The Supreme People Procuracy, the related ministries and agencies increase international cooperation on anti crime in general and anti money laundering criminals in particular *) For the State Bank of Vietnam: - Fulfill the drafting and submit to issue soon the legal documents include Decree and Circular to implement the Anti Money Laundering Law, submit to the Government for approval - Strengthening the organizational structure, upgrade the infrastructure of the information technology system of the Anti Money Laundering Department to increase the capapcity of supervise the money flows - Conduct the regular supervisory and inspection of credit institutions on anti money laundering - Increase international cooperation on anti money laundering - Enhance the supervisory functions to conduct supervison on credit institutions, increase the transparency of the banking supervision activities *) For Ministries and agencies: + Increase the information exchange, cooperation with State Bank of Vietnam regarding the inspections, supervision, investigation and prosecution on predicate offence and money laundering offence + For credit institutions, securities and insurance companies, real estate companies, reporting institutions have to improve the customer information update, customer identification, customer due dilligence, invest technology … to meet with the regulations of the State Bank of Vietnam 23 CONCLUSION OF CHAPTER Overall orientation and basic solutions to ensure the Vietnam's financial system to be safe, stable operations, develop and avoid the impact of the domestic and oversea crisis, means: Building a healthy national finances, make sure to maintain financial security, stable macroeconomy, monetary financing, facilitating economic growth associated with the renewal and re-growth model economic structure, solving the problems of social security, mobilization, management, delivery financial resources of the society efficiently, fair, conduct administrative reform consistently to ensure the efficiency and effectiveness of management, financial supervision In the short and the long term, financial markets need to address two fundamental issues: recommend solutions to handle with large NPLs that existed for many years (about 17% of the total outstanding loans of banking system) and solutions to promote the new financial flows to invest in the economy to support business stability, contributing to the development of economic growth The specific measures to ensure the security of Vietnam's monetary and banking markets, securities market and insurance market to enhance safety of the national debt, the solutions to improve the efficient of anti money laundering activities to ensure financial security of Vietnam in the international economic integration context These are the fundamental solution apply for each market, each region and solutions to support the financial markets To achieve financial security for the entire financial market of Vietnam, the solution must provide high uniformity, coherence in the single market that is the Vietnam’s financial market which has the impact and influence in the integration and articulation with the international financial markets CONCLUSION In the globalization process , Vietnam has integrated deeply in every field , particularly in the economic integration Vietnam is a country with a very open economy, average total of exports from 2007 to the present have been more than 1.5 times of the GDP However, during the integration, the payment flows between countries and Vietnam have been increased dramatically, such as import and export payments , direct and indirect investment together with the rise of international trade are the negative effects of globalization , such as the economic crisis, the financial, banking crisis have a negative impact on the economy of Vietnam Accompanied is the increase in global crime, especially crimes often take advantage of the operations of financial institutions and banks in the developing country where there has been lack of strict control mechanisms so that they can perform criminal activities, money laundering activities To avoid damage to the economy, to create the conditions for the financial system, banks to oparete more efficiently, minimize risk, create chance for financial markets to operate safely, efficiently, Vietnam needs to build the solution to ensure financial security for the operation of financial markets: 24 + The solutions to ensure the security for the monetary and banking market in Vietnam establishment, issued monetary stabilization policy, build and implement safety policies regarding the operations of financial institutions, improve the efficiency of the inspection and supervision of credit institutions and enhance risk management in the operation of credit institutions ; handling the abnormal activity of credit institutions; solving the NPLs to ensure that in the year 2015 bad debt credit institutions throughout Vietnam will be less than 5%; prevention and fight against organized crime in the credit institutions, forming the network solutions, building and enhanced the stability in the operation of the interbank market, market between credit institutions and central banks, manage and montor the portfolio of credit institutions + Strengthening the financial security solutions for the securities market, such as establishment and implementation of macroeconomic policies; develop, issue and supervise the implementation of the legal framework on implementing the law on securities and Vietnam's securities market, the major solution to develop the supervision of the participants in the securities market, the major solutions to develop the monitoring systems of the securities market, the transparency and control information mechanism relating to the securities market, the solutions to increase the quality of products for the securities market… + Strengthening measurers to ensure the financial security for government debt include: increase the efficiency of public investment, increased control growth of public debt, improve revenues, improving the foreign exchange reserves to increase the solvency of the economy, debt repayment plan, transparency to control public debt + Increase the efficiency of anti money laundering activities, anti criminal activities in the international economic integration context include: fulfill the legal framework to meet with domestic and international requirements; fulfill and improve the efficient operations of organizations responsible for anti money laundering; increase domestic among ministries and agencies on anti money laundering; increase international cooperation on anti money laundering, prevention global crime The synchronous solution of financial security for Vietnam's financial market should be conducted to meet the standard of quality and quantity, to ensure the appropriate cooperation of different market to make these market operate consistently within the financial markets [...]... difficulties in conducting international financial transactions CHAPTER 3 SOLUTIONS FOR THE FINANCIAL SECURITY OF VIETNAM S FINANICAL MARKET IN THE INTERNATIONAL ECONOMIC INTERGRATION CONTEXT 16 3.1 Orientation for Vietnam s financial security of financial market in the international economic integration context 3.1.1 Strategic orientation of financial market development Synchronously developing markets,... evaluation index endurance of the credit institution shocks in financial markets • The indicators reflect the financial security for financial institutions participating securities market, include: the safety index by Basel I and Basel II, the indicators of self financing, indicators net capital to meet liquidity • The indicator reflecting financial security for financial institutions insurance market. .. of financial markets nationally as a whole and in some cases could adversely affect the financial markets of the region and negatively affect global financial markets With this special meaning, the solutions of financial security for financial markets is of important to secure financial security for every country , contributing to the security for global financial markets Monetary and bank market including... the financial security for the securities market including: security, stability, development and ability to prevent a crisis The indicator reflecting financial security for financial institutions participating into securities market also include ratio of minimum capital, the ratio of net capital to meet the market liquidity +The factors that affect the financial security for the insurance market include... financial security for the operations of the Vietnam s financial market in the international economic integration context 3.2.1 Ensure the financial security for the operations of the Vietnam s monetary and banking market in the process of international economic integration Develop and promulgate monetary policy which is stable, highly concentrated targeting at controlling inflation, stabilizing the... the financial markets To achieve financial security for the entire financial market of Vietnam, the solution must provide high uniformity, coherence in the single market that is the Vietnam s financial market which has the impact and influence in the integration and articulation with the international financial markets CONCLUSION In the globalization process , Vietnam has integrated deeply in every field... following factors: safety, stability, development and crisis prevention capabilities…The factors affecting financial security for financial institutions participating in the insurance market including the minimum criteria of solvency margin, the criteria of minimum capital The monetary and banking market, ssecurities market and insurance market operate consistently within the financial markets Today, financial. .. strategies in place to meet the principles of integration, but aslo minimize the massive withdrawal of capital out of Vietnam market when there are adverse changes or crisis occurred 17 3.1.3 View point about financial security for Vietnam s financial market Two major views about financial security covering the financial market development in Vietnam is: + Build and develop adequate financial markets:... to 26% of GDP in the year 2012 2.2 The factual financial security of financial market, assessing, identifying, causing and lesson learnt 2.2.1 The factual financial security of Vietnam monetary and banking market, assessing, identifying, causing and lesson learnt 2.2.1.1 The factual financial security of Vietnam monetary and banking market Up to present, the credit institution system in Vietnam comprises... development for each credit institution and for credit institutions system as a whole The main measures to ensure financial security for the operation of the monetary and banking market in Vietnam in the international economic integration context, such as: developing and issuing monetary macro stability policy, forming and implementation of security policies in the operations of the credit institution;