Volatility in International Financial Markets and Monetary Policy in Viet Nam

This technical report outlines the implications of volatility in international financial markets for Viet Nam's monetary policy conduct. It discusses the significant progress Viet Nam has made in socio-economic development and financial system restructuring over the past four decades, highlighting the challenges posed by external shocks due to its high level of economic openness. The report details how recent global economic events, including the Covid-19 pandemic and geopolitical tensions, have affected international capital flows and exchange rates, impacting Viet Nam's economy. It explains the State Bank of Vietnam's (SBV) proactive monetary policy measures to stabilize the economy, including adjustments to interest rates and exchange rate management. The report further examines the role of non-bank financial institutions and digital assets in shaping the financial landscape, emphasizing the need for a flexible and coordinated approach to monetary policy to maintain macroeconomic stability and foster sustainable economic growth.