Vietnam Aims for Comprehensive Financial Market Reform by 2045

Vietnam is embarking on a comprehensive financial market reform aimed at transforming it into an effective capital raising channel for the economy, operating on market principles, with a target year of 2045. This strategic direction was outlined in a plan for the overall reform of Vietnam's financial market until 2045, signed and issued by Deputy Prime Minister Nguyen Van Thang on July 27. The plan aims to develop all financial markets, including banking, securities, insurance, capital markets, and new financial products, in a synchronized manner. By 2045, the financial market is expected to operate according to international principles, with an institutional system, infrastructure, products, investors, and monitoring mechanisms that meet global standards. Specifically, the stock market is envisioned to become a primary channel for raising medium and long-term capital for the economy. The banking system is to develop safely and modernly, while the insurance sector will grow sustainably. Vietnam's international financial center is expected to gradually become a hub connecting capital flows in the region. A key focus of the reform is to develop the capital and stock markets to be open and transparent, increasing their scale, depth, and efficiency in mobilizing medium and long-term capital for businesses and the economy. The plan directs efforts to enhance capital raising effectiveness through the issuance of stocks and bonds, and to boost the capacity of securities companies and intermediary financial institutions. The investor structure will also be adjusted to increase the role of institutions such as investment funds, pension funds, and insurance companies, reducing reliance on individual investors. By 2030, the value of assets held by foreign investors in the capital and stock markets is projected to reach approximately 15% of GDP. The total net asset value of securities investment funds is expected to reach 5% of GDP, and the asset size of pension funds is projected to grow at an average annual rate of 11.5% during the period 2026-2030. In parallel with capital market development, the banking system will continue to be modernized towards digital banking, expanded inclusive finance, improved credit quality, and ensured system safety. In terms of infrastructure, Vietnam aims to complete the connection of its payment system with regional and international partners by 2028 at the latest. The regulator will implement a central counterparty clearing (CCP) mechanism in the cash equity market in 2027 and build a shared database to support the management and supervision of the financial market during the 2030-2035 period. New products and markets will also be introduced, along with breakthrough mechanisms to increase the scale and liquidity of the capital market. To achieve these objectives, the government has proposed eight groups of solutions. In terms of institutions, Vietnam will review and amend current regulations and study the development of a law on the management and supervision of financial markets and financial services to unify the regulatory framework. Regarding products, Vietnam will gradually develop the digital asset market, in addition to stocks, bonds, derivatives, currency-credit, and insurance. The green capital market will also be promoted through green stocks, green bonds, ESG funds, and green stock indices. For investors, the government will encourage the development of long-term investment funds for infrastructure, real estate, innovative startups, and green projects. Simultaneously, efforts will be made to facilitate individual investors' participation in the market through professional investment institutions. For foreign investors, procedures for opening accounts, converting foreign currencies, and repatriating profits will be further simplified, alongside improving market access. In the banking sector, Vietnam aims to form several banks with regional scale and competitiveness. Large banks will be encouraged to adopt safety ratios early, approaching Basel III standards, accelerating the resolution of non-performing loans, limiting cross-ownership, and transitioning towards a risk-based supervision model. The remaining solution groups focus on modernizing payment infrastructure, enhancing market supervision, upgrading the stock market, developing the international financial center, and training high-quality human resources in fields such as AI, big data, cybersecurity, and risk management.