Vietnam government urged by Chinese financial institutions to accept CNY payments in a legal framework

Thursday 8 January 2015 10:42 CET | News

The Chinese Business Association (CBA) in Vietnam and the Industrial and Commercial Bank of China (ICBC) have proposed the local government to recognise the CNY as an official trade currency,

The two institutions, in a letter to Vietnamese agencies, say the demand for using CNY in payment has been increasing rapidly in the local market. The Chinese currency is not yet recognised by Vietnamese laws as payment currency in two-way trade. However, the currency has been used in transactions in an unofficial way.
The two Chinese institutions estimated that the two-way CNY-based cross-border trade turnover reached USD 15 billion by the end of 2013.

The proposal by the Chinese institutions has been forwarded by the Vietnam Chamber of Commerce and Industry (VCCI) to the appropriate agency. VCCI’s chairperson, Vu Tien Loc, confirmed that the proposal was mentioned in the VCCI’s November 2014 report about the businesses’ proposals to Vietnamese state management agencies.

Cao Sy Kiem, former governor of the State Bank of Vietnam, has claimed that there is a mandatory task to consider CNY’s reliability and the strength, besides the country’s economic capacity to accept the currency. Kiem also argued that the CNY would be accepted in case it proves safe for economic exchange and a convertible foreign currency.

Meanwhile, the other economists have immediately voiced their concern about the issue, repeatedly urging the government to refuse the proposal. They said that in the current two-way trade situation, if the CNY is used as official currency in payment, Vietnam will suffer.

Dr. Nguyen Quang A, a renowned economist, said Singaporean welcomed the Chinese currency in two-way trade because Singapore exports more to China than it imports from the market, which is unlike Vietnam, which imports much more than it exports.

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Keywords: Vietnam, government, China, ICBC, CBA, CNY, regulation, official, payments currency, two-way transactions, commerce
Categories: Payments & Commerce
Countries: World
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