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1 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
ENHANCING THE EFFECTIVENESS OF THE FINANCIAL SUPERVISORY
SYSTEM OF VIETNAM
ENHANCING THE EFFECTIVENESS OF THE FINANCIAL SUPERVISORY
SYSTEM OF VIETNAM
Pham Phan Dung
General Director
Banking and Financial Institutions Dept.
Ministry of Finance, Vietnam
Pham Phan Dung
General Director
Banking and Financial Institutions Dept.
Ministry of Finance, Vietnam
2 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
CONTENT
Part I: The necessity to improve the financial
supervision system capacity in Vietnam
Part II: Orientation of determining the
supervision model of the financial
system in Vietnam
Part III: Roles and functions of DIV in the
national financial supervision system
3 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
CONTENT
Part I: The necessity to improve the financial supervision system capacity in Vietnam
1.1 Introduction on the current supervision operation of the financial system in Vietnam
1.2 The fast moving financial market
1.3 Requirement of developing a market economy with Socialist orientation
1.4 The necessity to renovate supervision operation in accordance with international standards
4 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
1.1 Introduction on the current supervision operation of the financial system in Vietnam
• Supervision agency operates as policy maker and license
issuer
• A financial institution is subject to more than one supervision
agency
• Each supervision agency only functions in designated area
• Lack of cooperation between supervision agency
Lack of transparency, less effectiveness on overall supervision and early warning, creating burden to financial institutions
5 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
1.2 The fast moving financial market
• The Trend of mobilizing fund via financial market
• Increase of systemic risk and effect to the
national economy
6 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
1.3 Requirement of developing a market economy with Socialist orientation
• The commitment of the Government of Vietnam in the renovation process toward market economy
• Renovating principles: State Management based on the law and regulation system. The economy develop under market disciplines
• Continuing and unique policy: avoid overlapping, clear cut between responsibility of policy maker and supervisory function
7 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
1.4 The necessity to renovate supervision operation in accordance with international standards
• The effectiveness of consolidate supervision system
• The trend of establishing consolidate supervision system in economic transformed countries and countries effected by the financial crisis
8 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
Contents
Part II: Orientation of determining the supervision model of the financial system in Vietnam
2.1 Government Orientation
2.2 Types of financial supervision agency
2.3 Determine mandate and function of financial supervision agencies in Vietnam
9 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
2.1 Government Orientation
• Enhancing the effectiveness of financial market supervision, focus on the interaction between the monetary market and capital market
• Set up an appropriate supervisory mechanism
• Establish a general financial market supervision agency
10 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
2.2 Types of financial supervision agencies
Centralized model:
Japan
Korea
U.K
Diversified model:
China
Australia
11 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
Issuing license
Mandate&
Function
Determine process & Standards
Supervision and examination
Enforcement of violations and claims settlement
Maintain the stability of financial market
1- Maintain the stability and
sustainable development of
the financial market
2- Protect the interest of
market players
1- Maintain the stability and
sustainable development of
the financial market
2- Protect the interest of
market players
Objectives
2.3 Determine mandate and function of financial supervision agencies in Vietnam
12 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
CONTENTS
Part III Roles and functions of DIV in the national financial supervision system
3.1 Function and position of DIV in the financial supervision system
3.2 Comments on the development of DIV
13 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
3.1 Roles and functions of DIV in the national financial supervision system
• DIV is a component of the financial market and national financial supervision system
• Right to carry out examination of DIV
• Right to carry out supervision of DIV
• Mobilizing fund for claim payment
14 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
3.2 Comment on strategic development of DIV
• DIV to clearly determine the role and function in the national supervision system
• Propose the Government to formulate the Law on Deposit Insurance
• Improve the organizational structure, human resource and financial capacity
• Diversify services and products, modernizing operation
Best protect depositors, contribute to maintain the stability of the financial system in accordance with international standards
15 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007
Thank You !Thank You !
[email protected]@mof.gov.vn