On the morning of April 20, 2023, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) (chaired by the Training and Research Institute) and the Asian Development Bank (ADB) jointly organized a launching conference to announce the report "Vietnam Financial Markets 2022 and Outlook 2023" at the Melia Hotel in Hanoi. This event marks the second consecutive year that ADB and BIDV have collaborated to produce a comprehensive report of high quality.

Opening the conference, Mr. Tran Phuong – BIDV Senior Executive Vice President shared: "Following the success of 2022, BIDV continues to collaborate with ADB this year to organize a launching conference announcing the report "Vietnam Financial Markets 2022 and Outlook 2023". To the best of our knowledge, this report stands as the sole comprehensive evaluation of Vietnam's financial market, encompassing the fields of banking, securities, and insurance, and benefiting from technical assistance rendered by ADB. Taking into account feedback and opinions from pertinent agencies and experts, the current report focuses on the trends of both domestic and foreign financial markets for the year 2022 and the outlook for 2023, particularly concerning the current situation, trends, and potential for the development of green finance in Vietnam”.

The conference and report focus on three main contents.

Assessment of Vietnam financial markets in 2022 and the outlook for 2023.

Vietnam financial markets are still in the developmental stage and are vulnerable to external factors. In 2022, the repercussions from previous economic stimulus packages and the Ukraine-Russia conflict, coupled with a rapid increase in global inflation, led central banks of various countries to implement tight monetary policies by significant interest rate hikes, causing fluctuations in exchange rates and an escalation of global financial and monetary risks. Vietnam was not immune to this trend, and as such, the State Bank of Vietnam had to increase its operating interest rates, intervene in the foreign exchange market, conduct open market operations, etc. to reduce exchange rate pressure and control inflation.

In 2023, in the context of a mild global economic recession, with decelerating economic growth, easing inflationary pressures, more stable exchange rate and interest rates remaining at high levels, Vietnam financial markets, especially the banking sector, remained exposed to several potential risks, particularly in the aftermath of the collapses of some banks in the United States and Switzerland although they have been well handled. Vietnam's economy is forecast to slow down (5.5 – 6%) with inflation likely to be higher than in 2022 (4-4.5%).

Assessment of the current situation, opportunities, and challenges in Vietnam’s green finance development.

The global trend of green finance, involving international financial organizations, governments, and regional and national financial systems, is gaining significant momentum. Vietnam is actively participating in this trend by pursuing a green growth strategy and experiencing rapid growth in the green finance sector.

Accordingly, mechanisms and policies for the green finance market in Vietnam are gradually being improved with each type of instrument such as green, social, and sustainability bonds (GSS), green stocks, the Carbon market, and green credit. The current legal environment is relatively open to green finance products in Vietnam and establishing a conducive environment for  businesses to mobilize green capital domestically and internationally. However, the development of green credit and green bond under the new regulations of the 2020 Environmental Protection Law is still awaiting more detailed guidance.

In the future, Vietnam is expected to become an attractive destination for international green capital with an improving legal environment. Financial institutions and businesses are also making efforts to operate sustainably and utilise green finance more effectively, in order to mobilize capital for investment in sustainable development and international integration, etc.

Some policy recommendations

At the conference, the research team, experts, and delegates proposed some policy recommendations for the National Assembly, Government, State Bank of Vietnam, Ministry of Finance, and some related ministries, focusing on two main groups: (i) stabilizing and developing the financial market, and (ii) developing green finance.

Some policy recommendations aiming at stabilizing and developing the financial markets include: further improving the effectiveness of monetary and fiscal policy coordination; continuing to accelerate the disbursement of the 2022-2023 Recovery Program, national target programs, and public investment; implementing synchronous solutions to support liquidity for the financial system, restructuring weak credit institutions to limit unfair competition, continuing to reduce interest rates; establishing a conducive environment for financial institutions to increase their capital to meet the capital needs of the economy and ensure operating safety; enhancing operating and financial management, digital transformation, risk management capacity; paying attention to controlling systemic risks, particularly the financial sector and real estate nexus, etc.

The conference was well attended by Dr. Vu Nhu Thang - Vice Chairman in charge of National Financial Supervisory Commission; Dr. Vo Tri Thanh - Director of Institute for Brand and Competitiveness Strategy; Dr. Le Xuan Nghia - Director of Business Development Research Institute; Mr. Nguyen Minh Cuong - Principal Country Economist, Viet Nam Resident Mission, Southeast Asia Department, Asian Development Bank (ADB) in Vietnam; Prof. Dr. Jonathan Pincus - Senior International Economist at UNDP Vietnam; Mr. Ketut Ariadi Kusuma - Senior Financial Sector Specialist at World Bank Vietnam; Mrs. Ha Thi Kim Nga - Senior Economist at IMF Vietnam; Assoc. Prof. Dr. Pham Thi Hoang Anh - Vice President of Banking Academy of Vietnam; Mr. Pham Minh Tu - Deputy Director of Banking Strategy Institute - State Bank of Vietnam, etc. In addition, the conference also received the attention and participation of representatives from regulatory agencies, international organizations (UNDP, ADB, FNF, WB, etc.), financial institutions, professional associations, universities, research institutes, and the press and media, etc.