Analyze current situation of state management of gold market in Vietnam and its impact on monetary policy in the period of 2006 - 2016, thereby proposing solutions and recommendations to improve efficiency. State management results for the gold market in Vietnam.
1 INTRODUCTION Research Scope: Regarding content: researching the gold market as a financial asset About space: research at Vietnam State Bank, time from 2006-2016 Problem Statement of the Study Research Methods In Vietnam today, the management of operation and regulation of the gold market is a complex problem for the SBV and the Government Especially since 2009, under the The thesis uses two research methods: qualitative and quantitative Qualitative research used in the overview of research, internal content of state management for the gold market, study lessons learned from other countries applied to Vietnam Quantitative research used in collecting, statistically describing data, testing models, estimating variables impact of macroeconomic environment, the world political security is constantly unstable, so it has greatly affected the operation of the gold market In this context, the SBV has advocated a number of policies to manage gold bar trading The policy has brought about certain effects and contributions: Contributing significantly to the addition of foreign currency reserves, helping to stabilize the exchange rate, creating conditions for the SBV to strengthen the management of the foreign exchange market, increasing the stability of the market In the case of the gold market, there are still limitations of the gold market management policy that the SBV has implemented: the regulations have not been fully covered, such as the regulations on organization, operation mechanism, gold smuggling issues and mobilization gold among the people State management of the gold market covers very broad "socio-economic" issues, closely linked to important policies Currently, although there are many domestic and foreign studies focusing on gold and the gold market, there are not many studies on state management policy with the gold market The study of state management policies for the gold market in Vietnam as a gold is a financial asset is extremely necessary This is a research gap that the author wants to add with focus points: (i) presenting the synthesis of theories on state management of gold market in Vietnam systematically; (ii) assess the state of the state management policy with Vietnam's gold market in the period of 2006-2016; (iii) propose solutions and recommendations to improve the efficiency of state management with Vietnam's gold market Stemming from the above reasons, the topic "State management of the gold market in Vietnam" was selected as the research topic for the thesis Research Objectives and questions Research objectives: Analyze current situation of state management of gold market in Vietnam and its impact on monetary policy in the period of 2006 - 2016, thereby proposing solutions and recommendations to improve efficiency State management results for the gold market in Vietnam Research questions: (1) What is the relationship between the implementation of monetary policy and state management of the gold market? (2) What is the status of implementing the State management policy for the gold market in Vietnam? (3) What measures need to be taken to complete the state management of the gold market in Vietnam today? Research Target and Research Scope Research subject: state management of gold market affecting the state management on Vietnam's gold market by the VAR (Vector Autoregressive) method The software EVIEW9.0 is used for research The contributions of the thesis - In theory: The thesis will summarize and present systematically theories about gold, gold market and state management policies for gold market, the level of completion of the policy At the same time, studying the relationship between implementation of monetary policy and state management with gold trading activities From there, draw conclusions and propose solutions and recommendations to contribute to improving the efficiency of state management for the gold market in Vietnam Building an appropriate model to evaluate the effectiveness of state management policies for Vietnam's gold market in the 2006-2016 period - In reality: The thesis applies VAR model for periods from 01/2006 to 04/2012 and 05/2012 to 12/2016 (the time of decree 24/2012 / ND-CP issued, marking the basic changes on structure of the gold market) to evaluate the effectiveness of state management policies for the gold market in Vietnam before external shocks To answer the research question: How will the state management of the gold market react to changes in exchange rates, interest rates, inflation and foreign exchange reserves? - Impact of changes in monetary policy management: exchange rate, interest rate, inflation and foreign exchange reserves on gold prices - The response of macroeconomic variables to the fluctuations of domestic and world gold prices Empirical research results for gold prices affected by macro variables are exchange rates, interest rates, inflation and foreign exchange reserves of the SBV At the same time, the research results are the basis for the management agencies in the decision-making process to select appropriate policy tools to cope with external shocks in the economy to achieve development goals The gold market is stable and stable; stabilize the macro economy In which, in order for the State management policy for Vietnam's gold market to be effective, it is necessary to ensure a stable macro environment, and the value of the local currency Thereby, proposing solutions and recommendations for the state management policy for Vietnam's gold market in the period of 2016-2025 and orientation to 2030 3 Dissertation structure ETFs), Individuals investing in gold The thesis consists of chapters: Chapter 1: Basic theories on State management of gold market in the market economy; Chapter 2: Current situation of State management of 1.1.2.4 Gold market products gold market in Vietnam; Chapter 3: Model to assess the State management policy impact on the gold market with macroeconomic variables; Chapter 4: Solutions to improve the State management policy of gold market in Vietnam CHAPTER 1: BASIC THEORETICAL REGULATIONS ON STATE MANAGEMENT OF GOLD MARKET IN THE MARKET ECONOMY 1.1 Overview of the gold market 1.1.1 Theory of gold 1.1.1.1 The monetary role of gold For 5,000 years of human history, gold has always been fully represented as a means of monetary circulation on the following three basic functions: a measure of perfect value, a means of payment, a store of value 1.1.1.2 Classify gold as an IMF financial asset According to the IMF's accounting accounts system (EC, IMF, OECD 2008), the classification of financial assets is as follows: “Financial assets are economic assets and also financial instruments Most financial assets are financial liabilities arising from contractual relationships that are recognized when an entity provides capital to others ” (EC, IMF, OECD 2008) In terms of financial assets, gold includes: monetary gold and SDR In the Law on the State Bank of Vietnam 2010 stated: Foreign exchange reserves include: Gold under the State foreign exchange reserves In Decree No 24/2012 / ND-CP: "The State Bank of Vietnam is allowed to add gold bars to the State foreign exchange reserves" 1.1.1.3 Measurement standards and calculation of converted gold prices 1.1.2 Theory of gold market 1.1.2.1 Gold market concept However, the scope of the author's research limited gold to be considered a financial asset Therefore, the author proposed the concept: “The gold market is the place where gold products trading activities take place - as financial assets, as part of the currency market The price is determined by the market, the management of the gold market is an important function of the Central Bank” 1.1.2.2 Gold market classification Including: types of products of the market; organizational structure of the market 1.1.2.3 Members participate in the gold market - Central banks, commercial banks, gold traders, Gold Exchange Traded Funds (Gold - Group of physical gold products, Group of Trading products, Group of Margin products 1.1.3 Factors affecting gold price Factors include: Impact of market supply and demand on gold prices, Impacts of economic growth (GDP), Inflation, Interest rates, USD exchange rate; Oil prices; Geopolitical events such as wars and crises 1.1.4 The impact of the gold market in the market economy 1.2 Theories about state management for the gold market 1.2.1 State management policy concept with the gold market 1.2.1.1 Concept State management policy for the gold market is a system of policies and policies of the State that orient, organize the operation and supervision of the gold market in order to develop the gold market in a stable and sustainable manner, contributing to stabilizing the macro economy background, national economic development 1.2.1.2 The need of state management for the gold market 1.2.1.2 The goal of state management policy with the gold market - Ensure and maintain the stability of the gold market Ensuring consistency in the implementation of macroeconomic stability policies Protecting investor interests, improving market transparency 1.2.1.3 The role of state management policy for the gold market The author's point of view, the state management of the gold market should be considered and systematically evaluated and covered on all aspects: management by functions, operations and elements of the gold market 1.2.1.4 State management method with the gold market 1.2.2 The relationship between monetary policy and state management policy to the gold market 1.2.2.1 Impact of monetary policy on gold price The monetary quantity theory shows that investors will shift from holding money to holding financial assets (including gold or stocks) to receive a higher return, thus promoting price increases gold on the market Thus, in theory the monetary quantity of money supply impacts on gold price is shown as follows: MS ↑ → due to the effect of the wealth effect → gold demand ↑ → gold price ↑ 1.2.2.2 The role of State management of the gold market with the implementation of 1.3.1.1 Viewpoints, methods of managing the gold market in China monetary policy 1.2.3 The relationship between exchange rate policy and state management policy with 1.3.1.2 SGE model and how it works the gold market 1.2.3.1 General theory of exchange rate policy - Theory of Impossibe trinity: October 31, 2002 SGE was officially put into operation, the floor was closely monitored by PBoC All SGE trading platforms are electronic SGE offers spot gold trading, and option contracts Transactions are paid through the clearing center The most prominent is that the pricing and control mechanism of the gold market has completely changed Mundell and Krugman (1999) developed from the Mundell Fleming model idea: it is impossible to successfully implement three policies including fixed exchange rate regime, independent monetary policy and free flow of capital When the trade deficit is Instead of planning the gold trading price of PBoC, the price is marketed through SGE At the moment, only one founding member regulates transactions on SGE and decentralized exchange (OTC) combined with the interest rate difference, it will attract capital flows through channels such as short-term credit, stock market, gold market, which poses risks to the financial system because of the instability of this capital inflow Therefore, the government needs to intervene quickly and forcefully to control this capital flow carefully 1.3.1.3 VAT policy for gold in China 1.3.1.4 State management policy of gold market and capital control activities in China 1.3.2 State management policy for gold market in India 1.3.2.1 Infrastructure regulates the gold market in India 1.2.2.2 The impact of exchange rate policy on gold market state management policy - - Selecting the exchange rate policy objective affecting the state management of gold market Due to its special role to the economy, the Indian gold market is very well segmented - - Tools of exchange rate policy affecting the state management of gold market 1.2.4 The relationship between interest rate policy and state management policy for the by regulatory agencies with different functions and tasks The Reserve Bank of India (RBI), as a monetary regulator, regulates and oversees the financial system, plays a dominant role in the gold market gold market 1.2.4.1 General theory of interest rate policy 1.2.4.2 The transmission mechanism of the interest rate channel to monetary policy 1.3.2.2 Gold import and export activities in India 1.3.2.3 Tax structure for gold in India 1.3.3 Lessons learned for Vietnam 1.2.4.4 The impact of interest rate policy on gold market state management policy From the case studies of state management practices for the gold market of China and India, both have confirmed the importance and spread the role of state management to In many situations for a country with a high level of goldization, in order to ensure the effectiveness of the interest rate channel in the implementation of monetary policy, policy makers, the central bank, will proceed to limit the inter-capital flow through the domestic and international gold market 1.2.5 Criteria for evaluating state management policies of the gold market General criteria for evaluating the gold market include: Firstly, consistent with economic development orientations and strategies Secondly, sustainable development of the market, contributing to macroeconomic stability Thirdly, in accordance with international practices and practices Fourthly, ensure consistency and full power Fifth, stability and transparency Sixth, feasible and effective 1.2.6 Factors affecting state management of gold market 1.3 International experience on State management of gold market and lessons learned for Vietnam 1.3.1 State management policy for the gold market in China the gold market Every gold market contains certain risks related to the specific market of each country, so the issue of state management for the gold market is always placed urgently, regardless of size or market level Where is the school? Especially, the gold markets are still in its infancy and in the context of macroeconomic fluctuations, it is necessary to follow and strengthen the role of state management 1.4 Study Overview 1.4.1 Foreign studies on the gold market - Qualitative research on gold market structure: Gary O’Callaghan (1993) introduced and analyzed in detail the structural diversity of the gold market, Y.V Reddy (1997) The research paper on the change of gold management policy of the Central Bank of India Sun Zhaoxue (2011) has pointed out the relationship between the gold market and the health of the economy, while also giving an overview of gold industry in China Which highlights the role, mission of developing the gold market, the way to organize in accordance with the goals - Research on the operation mechanism of the gold market: Alberto (1983) provided a complete description of the gold function in the Jamaica system Baur and response to a change in gold prices, though mostly after this change is maintained for several months McDermott (2010) examined the role of gold in the financial system and considered gold more stable in terms of returns than stocks, bonds, and other financial instruments - Macro factors affecting gold price Interest rate: Harmston (1998) studied data on US Treasury bills and long-term government bonds from 1896 to 1996 and showed a negative correlation between gold price trends and the value of Other long-term bonds USD exchange rate and index: Sjaastad (2008) investigated the theoretical and empirical relationship between important exchange rates such as USD, Pound, Japanese Yen and gold using the wrong forecast data and argue that fluctuations in exchange rates between currencies are the main causes of instability in gold prices Inflation: Sherman (1983) holds that gold prices are positively correlated with the level of inflation, regardless of the existence of expected inflation Ranson and Wainwright (2005) think that gold price is an indicator of inflation and the bond market, and it can act as a predictor of inflation, short and long term nominal interest rates Geopolitical events: Barkoulas (2008) pointed out that in an extraordinary geopolitical event, in the short term, the price of gold increases while the price of gold mining companies declines Other factors: Malliaris et al (2009) used an ANN-a neural network to collect data on gold, oil and the euro from January 4, 2000 to December 31, 2007 Results of time series analysis indicate that there is a short-term and long-term relationship: oil changes in prices of gold, euro and oil have a strong impact on gold prices; The relationship between gold and the euro is the weakest - Studying the international monetary properties of gold: Cohen (1971) defined gold as an international currency from the perspective of monetary functions; The function of international currency is to expand the domestic monetary function abroad Tavlas (1997) states that when gold is a currency that acts as a measure of value, a means of exchanging and storing value in international transactions without the participation of currency issuers, that creates monetary internationalization - Research on the impact of monetary policy on gold price: William D Lastrapes, George Selgin (1995a) pointed out a positive gold price shock that caused the gold price to increase by 2% due to the effect of a gradual increase in the fund rate The federal nearly 10 basis points after about 12 months, and gradually reduced foreign exchange reserves These findings imply that the average Fed actually changes its foreign exchange reserves in 1.4.2 National research Nguyen Van Anh (2009) With the study "Solution to improve the efficiency of gold business management according to the functions of the Central Bank", the author pointed out that "gold in foreign exchange reserves is gold plays a monetary role At the same time, the central banks of all countries have gold management policies through the management of gold belonging to the national foreign exchange reserves and management of the domestic gold market” Nguyen Duc Trung (2012) With the study "Solution to manage gold market in Vietnam" for the first time, using econometrics applied to analyzing objectives and tools of SBV regulating gold market in Vietnam in period from 2006 to 2013 The model used is VAR model including variables: domestic gold price, international gold price, inflation, exchange rate, foreign exchange reserves Research shows that inflation, exchange rates, foreign exchange reserves all have an impact on domestic gold prices The author pointed out that the gold management policy of the SBV basically affects the market structure, positively affects the foreign exchange market, and monetary policy Bui Kim Yen and Nguyen Khanh Hoang (2013) with the research topic "Management of gold prices from a macroeconomic perspective" Research using econometrics as a VAR model for domestic gold prices, world gold prices, deposit rates, exchange rates and inflation to make comments on the SBV's gold market state management policy The study shows the relationship between the deposit interest rate, exchange rate and inflation variables with domestic gold prices in the 10-year period from August 2003 to July 2013 Thereby assessing the positive effects of the State Bank's gold market management policy Nguyen Thi Thanh Huyen (2015) with her PhD thesis "State management of gold trading activities in Vietnam" This is a systematic study on state management of gold trading, in which the author uses the method of sociological investigation with questionnaires The paper has systematized the contents of internal management of the state, and at the same time gave the system of criteria to evaluate the perfection of the state management policy of gold trading Tô Anh Dương (2009) with the study "Gold market management: International experience and policy recommendations for Vietnam" Through practical surveys of two markets, China and India, the author gave the experience of state management to the gold market in Vietnam as: (i) Managing on the basis of respect for market principles, supply laws The SBV's management objective is to make the optimal use of this resource Use gold resources for stable economic development (ii) Promote the concept of market liberalization, the roadmap should be consistent with the general trend Do Thi Thuy (2010) with the research paper "Vietnam Gold Market 2010 - Impacts on financial policies and operations of commercial banks", Through assessing the impact of macro variables such as exchange 10 rates, inflation to gold price and surveying activities of commercial banks, the study offers policy implications Tran Ngoc Tho (2014) with the research paper "Managing the gold market: The Mission of the State Bank", the research shows that gold is money (ultimate money) Therefore, gold market management is a tool of monetary policy to manage money difference between the exchange rates listed at commercial banks and exchange rates on the free market Credit growth is estimated at 29% a year on average Immediately, the domestic gold market was supported to create momentum for expansion of both scale and structure supply At the same time, by settling the gold position, bringing the gold to the balance sheet of commercial banks, it has contributed to stabilizing the macro economy 2.1.3 From 2006 to 2009 - Booming gold market 1.2 Research gap During this period, the domestic gold market continued to fluctuate, always growing hot with an explosion of gold trading units with production functions Beginning From the above summary, the thesis finds that there is still a gap that needs to be supplemented and completed as follows: The domestic and foreign studies have studied only a part of the aspect of the price of gold, gold trading activities, State management with in 2007, Vietnamese commercial banks launched a new type of business, the Gold Exchange In this period, in order to control inflation, the SBV implemented monetary policy tightened Vietnamese commercial banks immediately turned to gold trading on gold trading activities However, the systematic study of state management of the gold market on the level of gold as a financial asset is a research gap In which, the management of the gold market is closely linked with the implementation of monetary policy Empirical their accounts after the SBV tightened lending criteria for traditional commercial lending activities of commercial banks The price of gold has been constantly increasing, coupled with the long-standing preference of hoarding gold that people have been buying gold research in different countries will yield different results The thesis will approach towards systematizing monetary policy impacts on gold market state management policies, building a VAR model including many macroeconomic variables based on economic theories and drama from external shocks and from state management policies to the gold market by Increasing domestic demand for gold has created a high margin between domestic and world gold prices, putting pressure on USD demand to serve gold imports This situation lasted for a long time, causing psychological confusion for people month Quantifying this relationship in the model will be a highly practical applied research direction The thesis will analyze the impact of external shocks and state management policies on the domestic gold market through macroeconomic variables such as interest rates, exchange rates, inflation and national foreign exchange reserves Data analyzed by month, from the results of empirical research, the thesis will propose a number of related solutions to complete the state management policy for the gold market in Vietnam CHAPTER - CURRNENT SITUATION OF STATE MANAGEMENT OF GOLD MARKET IN VIETNAM 2.1 Practical gold market in Vietnam 2.1.1 Overview In Vietnam during a long period of war and political instability, gold was used as a traditional saving mechanism and even used as a means of payment and price standard for trading valuable assets The state management of the gold market has always had an organic relationship with the operation of monetary policy in Vietnam due to its binding on both laws and mechanisms 2.1.2 The period from before 2006 - The gold market started to be under control In 1999, the Government issued Decree No 174/1999/ND-CP to expand business activities in the gold market In 2004, in order to contribute to macroeconomic stability and to support exports, the SBV adjusted lower the VND / USD exchange rate, narrowing the 2.1.4 Period from 2010 - now: The SBV controls the gold market with administrative tools, associating the State management with the goal of stabilizing the macro economy The gold market witnessed a boom of the market in 2009, but behind the picture there are potential uncertainties as the state management has not kept pace with the development of the market On December 30, 2009, the Government issued an instruction order 369/TB-VPCP for the closing of all gold trading floors with a deadline of March 30, 2010 In April 2011, the State Bank issued Circular 11/2011/ TT-NHNN with the main content being that the SBV prohibited commercial banks from lending gold or accepting deposits in gold (called "gold mobilization") to any individual, organization Decree 24/2012/ND-CP specifically banned gold bars as a means of payment / intermediary exchange, the State switched to exclusive production of gold bars, this is the only unit allowed to import and export raw gold In the case of gold, gold bar trading may only be carried out by licensed entities The SBV holds gold as part of the official list of foreign reserves 2.2 Analyze the status of gold market 2.2.1 The situation of fluctuations between domestic and international gold prices Since 2012, there has been a clear contraction of the fluctuation range of domestic and international gold prices By resolute measures and efforts through the SBV's impact process, the domestic gold price was more stable before the fluctuations of international gold prices, thereby stabilizing the market 11 12 2.2.2 The continuity of the gold market and the foreign exchange market When the SBV issued Decree 24/2012/ND-CP the correlation between gold price index and USD has changed, the correlation is not as clear as the previous period Therefore, it is partly possible to see the effect of the SBV's policy on controlling the gold market 2.2.3 Difference between domestic and international gold prices The temporary suspension of interconnecting the domestic gold market with international instruments is a mandatory and prudent step to ensure the monetary security and internal health of the economy against changes The continuous and regular nature of the international gold price There exists a margin of difference between domestic and international gold prices as a result and due to a number of specific reasons as follows: 2.2.3.1 Imbalance between supply and demand for domestic gold 2.2.3.2 High volatility of international gold prices 2.3 Evaluation of State management measures for the gold market by the SBV 2.3.1 State management goal for the gold market of the SBV Firstly, enhance prevent goldization comprehensively Second, control the supply of gold bars to the market consistently Thirdly, stabilizing the domestic gold market is closely linked to macroeconomic stability 2.3.2 Positive aspects of the policy 2.3.2.1 The policy of ending mobilization and lending of gold in credit institutions The SBV showed initial orientations for credit institutions in mobilizing and borrowing capital in gold in a tightened direction This move by the SBV has created a timely reduction of the system's liquidity at the end of 2012, maintaining the necessary stability for gold prices At the same time combining gold bidding methods for commercial banks to settle the gold status, the SBV achieved two parallel goals at the same time: to ensure a stable gold price and gold market; gold is completely excluded from the two debt assets and creditors of commercial banks 2.3.2.2 Policy on management of gold trading and production activities With the highest determination in state management of gold trading activities in a tighter and more disciplined manner, the Government issued Decree 24 The Decree also made a great impact on market sentiment, falling gold prices but people People did not buy gold but continued to wait for more information of the market, especially speculation sentiment nearly disappeared 2.3.2.3 Measures against goldization Firstly, improve the effectiveness of monetary policy management by the SBV Second, help stabilize the forex market 2.3.2.4 Measures to stabilize the gold market - The SBV has created a funnel mechanism in concentrating resources to reinvest in the - economy Unifying a gold brand to help identify easily and ensure the rights of people At the same time, the SBV easily controlled the quality of gold bars in circulation The role of market stabilization is strictly and thoroughly implemented by the Government and SBV 2.3.3 Limitations need to be overcome 2.3.3.1 Restrictions in identifying goals, planning strategies for gold market development Firstly, the state management agencies not have a long-term vision for the gold market, leading to policy formulation that is always slower than the market development process Secondly, the SBV's regulations are all dealing with specific situations without specific provisions defining the Gold Market Development Strategy or the Gold Market Development Scheme 2.3.3.2 Restrictions in the legal framework governing the gold market Firstly, the SBV has not issued any regulations related to overall planning, detailed design and construction of the gold market Secondly, a number of state management policies on the gold market are lacking in comprehensiveness Third, the legal regulations on gold market activities are not consistent with other laws Fourth, the stability of state management policy of the gold market is not high 2.3.3.3 Restrictions in organizational structure of state management of gold market Firstly, the apparatus of State management of the gold market in Vietnam is a product that can handle the subjective situation of managers, but not really derived from the development function of the gold market Secondly, not in line with international practices, all have formed a specialized agency, independently managing the gold market, thus partly reducing the independence and flexibility in managing the gold market Thirdly, the organization of the state management apparatus for the gold market is still in favor of the state administrative organization organized by the SBV 2.3.3.4 Restrictions on policies and tools for State management of the gold market Firstly, the system of policies and tools is still inconsistent, many aspects are limited Secondly, instrumental policies cause financial repression, affecting the stability of policies and causing distinctions of business entities in the market 2.3.3.5 Policy on managing gold bar business activities Firstly, the openness and transparency of regulations on the gold bullion bidding process, the announcement of the bidding results, and the announcement that the volume of gold bullion purchases and sales of the SBV is not high Second, policies to mobilize gold reserves among the people have not been effective 2.3.3.6 Tax policies governing gold trading activities Firstly, in fact, the feasibility and effectiveness of VAT calculation by the method of direct VAT calculation with the same tax rate is applicable to a mixed business 13 14 establishment which has just conducted business activities Gold trading has not had high gold production yet Second, SCT for gold trading has not yet shown its role as a guiding tool 2.3.3.7 Gold smuggling problem In fact, the problem of gold smuggling is always a historical issue in Vietnam, when the official channels of gold import are limited, there will be unofficial channels of unofficial channels, these channels exist very diverse form CHAPTER 3: MODEL FOR ASSESSING THE IMPACT OF STATE MANAGEMENT POLICIES ON THE GOLD MARKET WITH MACRO ECONOMIC VARIATIONS Inheriting the views of the views of other models, the author chooses variables: Domestic gold price, International gold price, National foreign exchange reserve, Average deposit interest rate under 12 months of Vietcombank, USD / VND exchange rate of Vietcombank, Inflation Vietnam (CPI) The variables of the model are converted into a first order difference of natural logarithms instead of being absolute values 3.1.2 Study samples, research data and analytical methods gold market management in May 2012 to 12/2016 to clarify the relationship between exchange rates and gold prices in these two sections The dissertation uses the VAR - Vector Autoregression to analyze the impact of state management policies of the gold market The EVIEW9 software is used for analysis of the above model System of estimated equations The estimated model consists of a system of equations as follows: α1 + + ε1t k: Hysteresis value + + + 3.3 Results of running the model and discussion 3.3.1 Stationary test and lag in model (i) Stationary test Performing ADF Test for VAR model, all variables VNGOLD, INTERGOLD, FRES, INTEREST, VNCPI, VCBXRATE all stop at the first level difference with significance level of 1% Therefore, according to Sim, C.A (1980), the above variables can be used in the VAR model (due to have more statistical test numbers) The results show that the FPE SC and HQ tests all give lag of 0, and LR and AIC tests are Empirically, any policy has a certain lag, so the study continues Use the Portmanteau test to determine the optimal lag Portmanteau test for VAR model shows that the optimal level of VAR stage model is Therefore, the study will use VAR phase model with an optimal lag of 3.3.2 Test autocorrelation of the residuals and stationary of model The observed sample consists of 132 observations (11 * 12 months) from January 2006 to December 2016, the variables VNGOLD, INTERGOLD, INTEREST, VCBXRATE were taken averagely monthly, VNCPI, FRES variables were taken according to month The price analysis of data splits into phases from January 2006 to the effective date of Decree 24 (April 2012) and the period since Decree 24 was officially implemented, the SBV officially tightened management = ε : square coefficient matrix of the equation (ii) Choose lag in VAR model The results show that the FPE, AIC, SC, and HQ tests all give a lag of 1, while the LR test is Therefore, the author chooses the optimal lag of for the VAR model of phase 3.1 Research design 3.1.1 Research models GOLDVNt α, γ, , , + (i) Test autocorrelation of the residuals We have a phase VAR model with lag of with no autocorrelation We have a phase VAR model with lag of with no autocorrelation (ii) Test stationary of model Using the AR ROOT TEST test, we have both the VAR model of stages and with lag of which has passed the basic tests so it can be applied in analysis and forecasting 3.3.3 Impulse-Response analysis result (i) Relationship between exchange rates and domestic and international gold prices - Impulse-Response function between VCBXRATE and VNGOLD, INTERGOLD of VAR model phase 15 16 The results of the reaction show that before the issuance of Decree 24/2012 / ND-CP on gold business management, at the time of the domestic gold price increase shock with a magnitude of one standard deviation Vietcombank's selling rate also increased by 0.2%, international gold price increased by standard deviation, Vietcombank's selling rate (ii) Relation between CPI and domestic gold price increased by 0.5% - Impulse-Response function between VCBXRATE and VNGOLD, INTERGOLD of VAR model phase Phase Phase When there is a shock about gold price, the CPI does not change immediately but it will tend to peak at months, then decrease gradually within 6-7 months However, in phase 2, the fluctuation trend of CPI tended to be smaller In contrast, the results of the Impulse-Response in the picture above show that after the issuance of Decree 24, the exchange rate turned back when there was a shock of gold price increase The relationship during the period from May 2012 to December 2016 was that the domestic gold price increased by standard deviation, the selling rate of Vietcombank decreased by 0.10% after month and quickly balanced again in When the international gold price increased by standard deviation, Vietcombank's exchange rate decreased by about 0.03%, but the reaction occurred at the time when the gold price increased (without delay) This proves that the relation between the exchange rate and the world gold price after Decree 24 is the negative relationship and the reaction of the exchange rate with the world gold price faster than domestic gold price Thus, the application of Decree 24 has changed the nature and direction of the relationship between Phase Phase At phase 1, when the CPI increases by standard deviation, the price of gold increases by 1.3%, but then decreases and then returns to equilibrium However, in the second phase, if CPI increases by one standard deviation, gold price decreases by 0.3% and then stabilizes within months (iii) Relationship between interest rates and domestic gold prices exchange rates and domestic (international) gold prices Phase Phase When there was a shock about the gold price increased by standard deviation, in phase 1, the average mobilizing interest rate increased by 2.6% However, in the period of cents, the interest rate is almost unchanged Phase Phase 17 18 At phase 1, the impact of shock is very large and happens quickly in the short term of month, when VNGOLD's shock increases by standard deviation, VNGOLD increases by 7.7% Phase of the impact of the shock is longer but the magnitude is smaller, the level of the impact of the shock of VNGOLD increases by standard deviation, the VNGOLD increases by 4.7%, the impact decreases gradually within months Phase Phase On the other hand, the shock of average mobilizing interest rate has no immediate impact on gold price, the effect is not significant after that (iv) Quan hệ dự trữ ngoại hối với giá vàng nước Phase Phase The reaction of the domestic gold price to the shock of the international gold price in two periods was quite weak in the first cycle and affected within 3-4 months This shows that the domestic gold price is greatly affected by the psychology of speculators 3.3.4 The result of the variance decomposition of domestic gold price Phase Phase When there was a shock about gold price increased by standard deviation, in phase 1, the average mobilizing interest rate increased by 0.7% However, in phase 2, it is not changed immediately and tends to increase from to months Phase Phase In the opposite direction, the shock of the foreign exchange reserves has almost no immediate impact on the price of gold, this is shown in both periods (v) The relationship between domestic gold prices and the shock of domestic and international gold prices (i) Variance Disintegration of domestic gold price at phase Table 3.1: variance decomposition of VNGOLD at phase Period S.E DLOG (VNCPI) DLOG (VNGOLD) DLOG (INTERGOLD) DLOG (VCBXRATE) DLOG (FRES) DLOG (INTEREST) 0.007262 0.005900 99.99410 0.000000 0.000000 0.000000 0.000000 0.008838 0.383956 97.80115 0.395714 0.241299 1.110514 0.067366 0.009513 0.518597 97.03809 0.519251 0.249591 1.520517 0.153956 0.009805 0.691375 96.75673 0.529643 0.250728 1.616705 0.154817 0.009934 0.781328 96.63532 0.539395 0.250638 1.637287 0.156034 0.009990 0.831612 96.57889 0.542842 0.250713 1.639509 0.156438 0.010013 0.857015 96.55214 0.544254 0.250731 1.639152 0.156711 0.010023 0.869141 96.53946 0.544779 0.250735 1.639028 0.156862 0.010027 0.874640 96.53351 0.544964 0.250735 1.639208 0.156938 10 0.010029 0.877022 96.53078 0.545025 0.250734 1.639460 0.156975 (ii) Variance Disintegration of domestic gold price at phase Table 3.2: variance decomposition of VNGOLD at phase Period Phase Phase S.E DLOG (VNCPI) DLOG (VNGOLD) DLOG (INTERGOLD) DLOG (VCBXRATE) DLOG (FRES) DLOG (INTEREST) 0.003645 7.433076 92.56692 0.000000 0.000000 0.000000 0.000000 0.004665 8.915331 90.44945 0.157723 0.028636 0.257691 0.191169 0.004794 8.941034 90.24957 0.214253 0.056233 0.339386 0.199519 0.004828 8.957908 90.20619 0.215246 0.056929 0.364217 0.199512 0.004835 8.960109 90.19662 0.215680 0.057326 0.370774 0.199492 19 20 0.004836 8.960536 90.19484 0.215677 0.057401 0.372058 0.199490 0.004837 8.960623 90.19445 0.215680 0.057414 0.372345 0.199489 0.004837 8.960638 90.19437 0.215681 0.057417 0.372401 0.199489 0.004837 8.960642 90.19436 0.215681 0.057418 0.372412 0.199489 10 0.004837 8.960642 90.19436 0.215681 0.057418 0.372414 0.199489 Variance Decomposition of VNGOLD in two phases shows that: in both periods, the influence of variables VCBXRATE, FRES, INTEREST on domestic gold price of VNGOLD is low The first stage is respectively 0.25%, 1.63%, 0.15%; the second stage is respectively 0.05%, 0.37% and 0.19% At the same time, the influence of international gold prices on domestic gold prices tends to decrease from 0.54% to 0.21% Therefore, the domestic gold price is more stable due to external impacts when the SBV strictly controls the gold market 3.3.5 Discuss results and policy suggestions management activities of the state management agencies on the gold market, improving market stability, contributing to limiting negative impacts on the macro economy Thirdly, gradually liberalize the gold market according to a suitable roadmap suitable to the general context of the economy and the level of market development Fourth, mobilizing to use capital in the form of gold effectively to develop the economy 4.1.2 Viewpoint of completing state management for the gold market in Vietnam Firstly, improving the State management of gold market must be systematic, inclusive and synchronous between all stages of the management process Secondly, state management of the gold market must be balanced, in accordance with the conditions of the people and market rules Thirdly, state management for the gold market must work towards a stable and efficient market 4.1.3 Orientation of gold market development in Vietnam in the period of 20212025 The results of running the VAR model in the two periods from 01/2006 to 04/2012 and 05/2012 to 12/2016 are statistically significant because they have passed the basic tests: LM Test has no significant correlation between residuals, the model ensures stability Firstly, developing the gold market in accordance with the current economic conditions and following the general trend of economic development; At the same time, step Firstly, the research results of the thesis are consistent with some previous empirical studies Second, Vietnam's gold market is very specific in nature, exchange rate variables, inflation, interest rates have little impact on the price of gold The level of explanation and reaction of the above variables on gold prices is very low This is explained by the specific by step towards international economic integration on the basis of complying with international standards and practices Secondly, improving the market organization system on the basis of enhancing the role of supervision and state management with market participants to minimize market risks and ensure investors' rights Thirdly, perfect the legal characteristics of Vietnam's gold market Thirdly, the influence of exchange rate, inflation and interest rate variables tends to decrease with gold price Especially, the relationship between the exchange rate and the world gold price after the SBV controls the gold market framework and policies to support the gold market Fourthly, to build a centralized gold trading floor, diversify products in the market, the State Bank plays the role of regulating the market is inversely related The impact cycle of the above variables is usually from 2-3 months, but the opposite effect of gold prices on these variables is larger and has a longer impact period of 5-6 months At the same time, the domestic gold price is greatly affected by the management policy of the SBV Therefore, the gold market management policies of the 4.2 Policy solutions to improve the state management of gold market in Vietnam 4.2.1 Complete the tasks and goals of State management of the gold market in Vietnam SBV need to be stable and consistent in order to make the gold price more stable, contributing to stabilizing the macro economy CHAPTER 4: SOLUTIONS TO IMPROVE THE STATE MANAGEMENT POLICY OF GOLD MARKET IN VIETNAM 4.1 Objectives, views and orientations for gold market development in Vietnam 4.1.1 The objective of developing Vietnam's gold market Firstly, to build a stable and efficient gold market on the basis of perfecting the structure and operating infrastructure Secondly, strengthening the supervision and 4.2.1.1 The basis of defining the tasks, objectives of state management of gold market 4.2.1.2 Pillar value of state management tasks and objectives for the gold market 4.2.2 Improving the organization of state management apparatus for the gold market The National Gold Board is a specialized governing body composed of members representing the relevant governing bodies The author proposes the establishment of the Gold Board of Vietnam (GBV) under the SBV, with members representing the relevant governmental agencies under the Government The purpose is to have a consensus on policy decisions related to gold, to maximize the benefits between the participants 21 22 4.2.3 Improve policies and tools for State management of gold market 4.2.3.1 Improve the legal framework for gold bar trading 4.2.3.2 Group of solutions related to the management of gold import and export activities 4.2.3.3 Group of solutions related to tax policy for gold trading activities 4.2.3.4 Develop a macro risk warning and prevention tool for the gold market In order to contribute to creating a healthy and effective macroeconomic policy framework to create a sustainable environment for gold market development, an effective process should be developed to assess the impact of the central bank on the foreign exchange market through That helps the management subjects to be more active in making management decisions to stabilize the great economy, prevent the factors causing the financial and monetary crisis One of the most commonly used tools internationally and academically and technically updated by experts is the use of the Exchange Market Pressure index (EMP) 4.2.3.5 Strengthen inspection and supervision of the gold market 4.2.4 Group of solutions to stabilize macroeconomic and effective monetary policy 4.2.4.1 Improve implementation of monetary policy According to the results of quantitative research, the macroeconomic variables related to operating monetary policy have a great impact on the price of gold and the state management of the gold market Therefore, for the gold market to develop stably, sustainable economic growth and macroeconomic stability are all important impact factors 4.2.4.2 Solutions to support export activities 4.2.4.3 Solutions related to foreign exchange reserves 4.2.5 Groups of long-term solutions develop the gold market 4.2.5.1 Sustainable development of the gold market 4.2.5.2 Completing the policy of gold mobilization To be suitable for Vietnamese conditions, the gold mobilization scheme can be proposed as follows: Figure 4.1: Proposed gold mobilization scheme in Vietnam Author developed from the report of Shri Ratan P Watal (2018) 4.2.5.2 Constructing centralized gold exchange The long-term strategy in managing the gold market is to establish a centralized gold exchange under the strict management of the state This is considered a common and official playground for investors and is a tool for the SBV to manage and supervise, thereby regulating market-oriented regulation of monetary policy and exchange rate policy 4.3 Recommendations for state management agencies 4.3.1 Recommendations to the Government 4.3.2 Recommendations to the SBV 4.3.3 Recommendations to other organizations CONCLUSION Throughout the development history, the gold market is an important organic part of the financial market, the strict control of the gold market-oriented rules will have a good impact on the foreign exchange market and the economic environment macro The thesis draws out that for different situations of the economy, there will need different goals for macroeconomic policies and appropriate monetary policies to develop the national economy Policies to develop the gold market need to be linked to the general development context of the economy Under the current conditions, the tight control of the gold market to stabilize the macro-economy and prevent goldization by administrative measures is a necessary solution However, when the economy is more stable, the state management of the gold market needs to follow international practices, establish a gold trading floor, tightly control the illegal supply of gold, and monetary policy should be more flexible to as a 23 prerequisite for further development of Vietnam's gold market The research also has certain limitations such as: Firstly, the selection of domestic gold price as a representative of the state management policy for the gold market cannot fully cover the content of the policy variable Secondly, the limitation of time series, the State Bank's increased control of the gold market does not fully reflect the content of state management of the gold market in Vietnam Thirdly, the author has just studied gold on the aspect that financial assets have not been studied on account gold and jewelry gold, these are very rich and diverse gold products, especially current account gold accounting for a very large volume of transactions in the world This is a proposal for further research directions later ... the State management policy of gold market in Vietnam CHAPTER 1: BASIC THEORETICAL REGULATIONS ON STATE MANAGEMENT OF GOLD MARKET IN THE MARKET ECONOMY 1.1 Overview of the gold market 1.1.1 Theory... ETFs), Individuals investing in gold The thesis consists of chapters: Chapter 1: Basic theories on State management of gold market in the market economy; Chapter 2: Current situation of State management. .. 1.1.4 The impact of the gold market in the market economy 1.2 Theories about state management for the gold market 1.2.1 State management policy concept with the gold market 1.2.1.1 Concept State management