A central bank independent from the government will allow more active implementation of monetary policies in Vietnam, says Vu Viet Ngoan, vice chairman of the National Assembly's Economic Committee.
"I'm not concerned about the central bank being given many authorities or functions, in fact there are many suggestions that the central bank needs to be made more independent," Ngoan said in an interview published by the Vietnam Economic Times Tuesday, where he discussed amendments to the State Bank of Vietnam Law.
In most advanced economies, the central banks are independent and even if they are not separated from the Finance Ministry or the government their monetary policies are highly independent, the legislator said.
"Even though they are separated, the mutual goal of the government and the central bank is to ensure the interests of the nation and the economy," Ngoan said.
Vietnam's central bank law should be amended in a way that gives it increased autonomy and flexibility in creating and implementing monetary policies, he said.
"Some key instruments including foreign exchange rates, interest rates and money supply will be regulated and decided by the government, but preferably only in the form of setting orientations or goals.
"For example, the government can set a target forex rate or interest rate and within a given range the State Bank of Vietnam will be the regulator using instruments such as compulsory reserves or open market transactions," Ngoan said.
The amended law will stipulate clearly what issues can be decided by the central bank without seeking advice from the government, he added.
The Amended State Bank of Vietnam Law is scheduled to be discussed at a meeting of the National Assembly Standing Committee on Thursday.