Abstract
This paper summarizes Vietnam’s developments in the banking and financial sector to date. It assesses the system’s weaknesses that played an important role during the macroeconomic turbulence of 2008. It then discusses the need for deeper reforms of the country’s key macroeconomic institutions. In general, for Vietnam to achieve its goal of becoming a modern industrialized economy by 2020, it needs to have world-class public institutions to complement a flexible and entrepreneurial private sector. Nowhere is this more true than in the banking and financial markets where effective policy-making and skilful regulation have to be balanced against profitable risk-taking — all set against a background of commitment to a one-party state where social and political stability still reigns supreme.
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