Decision No. 893/2001/QD-NHNN on the implementation of foreign currency swap transactions between the State Bank and banks to meet short-term capital needs denominated in Vietnamese Dong for the banks.

DECISION

Regarding the implementation of foreign currency swap transactions between the State Bank and banks to meet short-term capital needs in Vietnamese dong for banks

To address the short-term capital needs in Vietnamese dong for banks

for banks

 

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 12, 1997;

Pursuant to the Government Decree No. 15/CP dated March 2, 1993 on the tasks, powers, and responsibilities of state management of ministries and ministerial-level agencies;

Pursuant to the proposal of the Head of the Monetary Policy Department,

 

DECISION:

Article 1. This Decision stipulates the implementation of foreign currency swap (SWAP) transactions between the State Bank and banks to meet short-term capital needs in Vietnamese dong for banks in cases of temporary shortages of available capital in order to manage the money market according to monetary policy targets during each period.

Article 2. The foreign currency swap transactions specified in this Decision shall be carried out through the State Bank's agreement to purchase US dollars from banks on a spot basis (SPOT), while simultaneously reselling the same amount of US dollars to the banks at a later date on a forward basis (FORWARD). Swap transactions with other foreign currencies shall be regulated by the Governor of the State Bank during each period.

Article 3. The State Bank uses funds supplied for refinancing purposes during each period to implement foreign currency swap transactions with banks.

Article 4. The subjects participating in foreign currency swap transactions with the State Bank as prescribed in this Decision are banks licensed by the State Bank to operate in foreign exchange.

Article 5. Foreign currency swap transactions with the State Bank are conducted with terms of 7 days, 15 days, 30 days, 60 days, and 90 days.

Article 6

1. The State Bank's buying rate for US dollars is the spot buying rate of the State Bank on the day the foreign currency swap contract is signed (or the day the foreign currency swap transaction is confirmed via the Reuters network).

2. The selling rate of the State Bank when reselling US dollars to banks conducting foreign currency swap transactions is determined based on the spot selling rate of the State Bank on the day the foreign currency swap contract is signed (or the day the foreign currency swap transaction is confirmed via the Reuters network) and the monetary policy management objectives during each period. The State Bank announces the selling rate applicable when reselling US dollars to banks conducting foreign currency swap transactions during each period.

Article 7. The State Bank conducts foreign currency swap transactions with banks at the State Bank Trading Center.

Article 8. Procedures for implementing foreign currency swap transactions:

1. When there is a need to conduct foreign currency swap transactions, banks submit written requests to the State Bank (Monetary Policy Department) detailing the evidence of the shortage of available capital in Vietnamese dong, which the State Bank will review and decide upon.

2. Upon approval by the State Bank, the bank requesting the foreign currency swap transaction conducts the swap transaction with the State Bank (Trading Center) according to the attached contract model, or executes it through the Reuters trading system.

3. The transfer of US dollars to sell to the State Bank must be completed within two working days following the signing of the foreign currency swap contract (or the day the foreign currency swap transaction is confirmed via the Reuters network). Immediately upon receiving notification of the receipt of foreign currency, the State Bank transfers Vietnamese dong to the bank conducting the foreign currency swap transaction.

4. The transfer of Vietnamese dong to repurchase US dollars from the State Bank must be completed within two working days following the end date of the signed foreign currency swap transaction contract (or the end date of the confirmed foreign currency swap transaction term via the Reuters network). Immediately upon receiving notification of the receipt of Vietnamese dong, the State Bank transfers US dollars to the bank conducting the foreign currency swap transaction.

Article 9. Late payment handling for the transfer of funds as stipulated in Clause 3 and Clause 4, Article 8 of this Decision is as follows:

1. In case of late transfer of US dollars: apply a penalty equal to 150% of the interest rate for the same term on the Singapore Interbank Offered Rate (SIBOR) calculated on the number of days delayed and the amount delayed.

2. In case of late transfer of Vietnamese dong: apply a penalty equal to 150% of the current refinancing rate of the State Bank calculated on the number of days delayed and the amount delayed.

Article 10. Responsibilities of units within the State Bank:

1. On a weekly basis or as necessary, the Monetary Policy Department shall coordinate with the Foreign Exchange Management Department and the Credit Department to exchange information about the supply and demand situation of foreign currencies in the market, exchange rate fluctuations, changes in available capital of banks, and the State Bank's refinancing situation for banks to forecast the direction of foreign currency swap transactions in relation to other capital regulation tools of the State Bank such as refinancing loans, discounting, and open market operations, and report to the Governor for decision-making.

2. 1. Submitting to the Governor for approval of the funds supplied for refinancing purposes during each period to implement foreign currency swap transactions with banks and notifying relevant units to carry out the foreign currency swap transactions.

2. 2. Within a maximum of two working days from the date of receiving requests for foreign currency swap transactions from banks, if agreeing to the swap, prepare a report for the Governor to approve the foreign currency swap transaction with each bank and notify the Trading Center to execute it. If refusing to conduct the foreign currency swap transaction, a letter must be sent to the bank explaining the reasons for refusal.

3. The Foreign Exchange Management Department is responsible for providing daily information to the Monetary Policy Department and the State Bank Trading Center regarding the State Bank's buying and selling rates for foreign currencies and the exchange rates in the inter-bank foreign exchange market.

4. The State Bank Trading Center is responsible for:

4. 1. Specifying the time for transferring funds.

4. 2. After receiving notification from the Monetary Policy Department, execute the foreign currency swap contracts or conduct foreign currency swap transactions with banks via the Reuters network.

4. 3. Handle violations related to fund transfers as stipulated in Article 9 of this Decision.

4. Weekly, compile and report to the Governor of the State Bank of Vietnam on the implementation of foreign currency swap transactions for the previous week, while sending copies to the Monetary Policy Department, Foreign Exchange Management Department, and Credit Department.

5. The Accounting and Finance Department shall be responsible for guiding the accounting of foreign currency swap transactions as stipulated in this Decision.

Article 11. This Decision takes effect from the date of signature. Any additions or amendments to the provisions of this Decision shall be decided by the Governor of the State Bank of Vietnam.

Article 12. The Director of the Office, Heads of the Monetary Policy Department, Foreign Exchange Management Department, Credit Department, Trading Department of the State Bank of Vietnam, Head of the Accounting and Finance Department, Heads of relevant units at the Central State Bank, General Directors (Directors) of banks participating in foreign currency swap transactions with the State Bank of Vietnam are responsible for implementing this Decision./.

 

ANNEX

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

Number: …/HĐKT-NHNN

FOREIGN CURRENCY SWAP TRANSACTION CONTRACT

- Based on the Economic Contract Ordinance dated September 29, 1989 of the Council of Ministers of Vietnam.

- Based on Decree No. 63/1998/NĐ-CP dated August 17, 1998 of the Government Chairman regarding Foreign Exchange Management.

- Based on Decision No.: ... /2001/QĐ-NHNN dated .../.../2001 of the Governor of the State Bank of Vietnam on the implementation of foreign currency swap transactions. between the State Bank of Vietnam and banks to meet short-term capital needs of the banks.

Today, the ... day of the ... month of the ... year, we include:

Party A: State Bank of Vietnam

Fax:

Email/Website:

2. Intellectual Property Rights Owner:

Representative: Mr. (Mrs.) ...

Position:

Party B: Bank...

Fax:

Email/Website:

2. Intellectual Property Rights Owner:

Representative: Mr. (Mrs.) ...

Position:

jointly sign this foreign currency swap transaction contract with the following terms and conditions:

Article 1. Party B sells USD spot to Party A at the exchange rate of ... VND/USD.

Article 2. Party A sells USD forward for ... days to Party B at the exchange rate of ... VND/USD.

Article 3.

The transfer of funds and handling of delayed transfers shall be carried out according to Clause 3, Clause 4, Article 8, and Article 9 of Decision No.: ... /2001/QĐ-NHNN dated ... /... /2001 of the Governor of the State Bank of Vietnam on the implementation of foreign currency swap transactions. between the State Bank and banks to meet short-term capital needs in Vietnamese Dong for the banks.

Article 4.

Both parties commit to strictly implement the terms and conditions recorded in this Contract. In case of any difficulties arising, both parties must promptly notify each other in writing to resolve them together.

This Contract is made in four originals, all having equal validity. Each party retains two originals.

Representative of Party A                                                                                               Representative of Party B