The central bank has proposed a restriction on the use and hoarding of all foreign currencies in the entire Vietnamese territory, leading to disagreement from the National Assembly’s Economic Committee.

There are no reasons to ban the public from keeping foreign currency, the Committee said Thursday in response to a draft amendment on the Ordinance on Foreign Exchange. One of the objectives of the amendment, developed by the State Bank of Vietnam, is to “gradually reduce the use of foreign currency in the economy, heading towards the target that only the Vietnamese dong is used within the territory of Vietnam,” according to Governor Nguyen Van Binh. While the economic committee agreed that such change will contribute to the fight against dollarization, its chairman Nguyen Van Giau expressed concern that the rule will affect the rights and interests of the public. “This is a sensitive issue,” he said. “The reactions from the foreign currency holders may even put a negative impact on the foreign currency liquidity of the banking system, as well as the annual remittance flow to the country,” he added. Phung Quoc Hien, chairman of the NA’s Committee for Budget and Finance, also suggested not restricting the people’s right to store foreign currencies. “We should only stipulate that all transactions, payments, and price listing made within the territory of Vietnam be done in the Vietnamese dong,” he said. In response, Governor Binh said the central bank will thus maintain the current regulations in the ordinance for foreign exchange. “We can still combat dollarization by other measures, such as capping the deposit interest rate for US dollars to 2 percent,” he said.