HANOI: Vietnam's parliament on Wednesday (April 8) approved career banker Pham Duc An (pic) as the new central bank governor for a five-year term, state media said.
The change is part of a regular leadership turnover and is not expected to have a significant impact on monetary policy, but it comes at a delicate moment when central banks around the world grapple with an energy crisis caused by the Iran war.
An is a member of the ruling Communist Party and has extensive experience in domestic commercial banking.
He spent about two decades at the Bank for Investment and Development of Vietnam (BIDV), one of Vietnam's leading state-owned commercial lenders. He also worked at other banks, including the Vietnam-Russia Joint Venture Bank in 2011-14, according to Vietnam's government.
An replaces Nguyen Thi Hong, who has led the State Bank of Vietnam (SBV) since 2020. During her tenure, the central bank oversaw the country's largest-ever bailout, injecting more than US$25 billion into Saigon Commercial Bank over about two-and-a-half years after a run on the lender in October 2022.
The leadership change, reported by Reuters in late March, follows the five-yearly congress of the Communist Party in January and the appointment of Le Minh Hung as the country's new prime minister on Tuesday. The central bank governor is a member of the government in Vietnam.
The SBV has a primary mandate to control inflation, with growth-supporting policies as a secondary objective. In recent years, however, it has repeatedly raised credit-growth targets, fuelling economic expansion as the Communist Party pushed for faster growth.
That unconventional credit-growth tool, which involves setting caps that effectively work as targets, is a key instrument the bank uses to conduct monetary policy.
Last year the credit-growth target for the banking system was raised to 20% from 16%, with specific goals for each bank. After concerns over asset-bubble risks, this year's target in January was lowered to 15%, although it is often adjusted during the year.
During Hong's term, the SBV tried at times to soften the impact of political decisions that could pose risks to long-term stability.
Last year it warned about risks from a bid by leading conglomerate Vingroup for a major railway project that would have transferred most financial risks onto the state budget. Vingroup later withdrew its bid.
"Growth must go hand-in-hand with inflation control and macroeconomic stability, and stability will not be sacrificed for short-term growth," Hong said in one of her last public speeches in late March.
On Monday, she was appointed a deputy head of parliament. - Reuters
