The State Bank of Vietnam, created in 1951, was the central bank of issue for the DRV, with numerous branches throughout the territory and an extensive agricultural and industrial loan service; in 1976, it became the central bank of the SRV. Foreign exchange is regulated by the Foreign Trade Bank. The Bank for Agricultural Development provides loans to the agricultural and fishing sectors.
Financial chaos became a constant threat during the final years of the RVN. The National Bank of Vietnam (NBV), established in 1954, was the sole authority for issuing notes, controlling credit, and supervising the formation of new banks and changes in banking establishments.
In early May 1975, shortly after the fall of Saigon, the new revolutionary regime announced the temporary closure of all banks in the south, although the RVN piaster continued to circulate as the only legal tender. Two months later, the National Bank of Vietnam was reopened under new management. Stringent regulations were announced to control inflation and limit currency accumulation. All private Vietnamese and foreign banks were closed in 1976. By then, the Hanoi regime had ordered a complete withdrawal from circulation of the RVN currency and its replacement by the dong, in use in the north.
Since the banking reorganization of July 1988, but particularly since 1992, Vietnam has moved to a diversified system in which state-owned joint-stock, joint-venture, and foreign banks provide services to a broader customer base. The first foreign representative bank office arrived in 1989. In 1992, foreign banks were granted permission to open full commercial branches. The government set up the Bank for the Poor in 1995, and gave it the task of lending to "the poor living in underprivileged areas." As of December 1998, in addition to four state-owned commercial banks, there were numerous joint-stock banks, foreign bank branches, joint-venture banks and foreign banks with representative offices. Foreign banks only recognize three of the joint-stock banks as viable partners, however.
The state banks still dominate the system, state enterprises are still the main borrowers, and their lending is still predominantly short-term because of the skewed interest rate structure. These banks are the Bank of Foreign Trade (Vietcombank), the Vietnam Industrial and Commercial Bank (Incombank), the Vietnam Bank for Agriculture and Rural Development (BARD), and the Vietnam Bank for Investment and Development (BIDV).
Two banking decrees, issued in October 1990 and governing respectively commercial banks, credit cooperatives and other financial institutions, and the State Bank, aimed to regulate the financial system more strictly. Credit cooperatives had to be licensed by the State Bank rather than by local People's Committees. The first decree also gave the state commercial banks greater autonomy, and permitted them to compete with each other and to seek capital from sources other than the state. The second decree introduced new instruments through which the State Bank could control the banking sector, including open-market operations and varying reserve requirements and discount rates.
Despite these changes, the banking system is in poor health. Public confidence in the system remains low. Only 4% of all potential holders of accounts have actually opened one. There were only 10,000 bank accounts in the entire country of 80 million people in 2002. As of 2002, the Vietnam banking system had gained little international confidence, although international audit standards are beginning to be implemented. Loan fraud investigations and low loan liquidity have brought bank finances under scrutiny. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $7.6 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $17.1 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 4.8%.
In July of 2000, the Vietnam Stock Exchange opened its doors for the first time.