Credit Growth Quota Policy: Balancing Expansion and Safety in the Banking System

The delicate balance between credit growth and financial system safety remains a critical concern for policymakers. As the banking industry faces dynamic challenges, ensuring prudent credit expansion while safeguarding stability becomes paramount. Let’s delve into the intricacies of credit growth quota policies and their implications.

By the end of November 22, 2023, the credit growth of the entire banking system reached only 8.21%, significantly lower than both the initial 14-15% target set at the beginning of the year and the 14.5% credit growth rate allocated by the State Bank of Vietnam (SBV) to commercial banks. However, the credit growth rate of commercial banks exhibited notable variation.

Striking a Balance

The credit growth quota policy must tread carefully. While stimulating economic activity through credit expansion is essential, it should not compromise the safety and resilience of the banking system. Striking this balance requires a nuanced approach that considers both macroeconomic conditions and systemic risks.

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