Impacts of monetary policy on asset markets: the case of Vietnam

Monetary policy, which is implemented by central banks by influencing money supply, usually has important impacts on market interest rates, exchange rates, asset prices and the public’s expectations, thereby affects the macro economy. In this paper, impacts of the Vietnamese central bank’s monetary policy (i. e. the State Bank of Vietnam or SBV) on asset markets will be studied. The paper includes two main parts: (i) Fundamentals of asset prices in monetary transmission mechanism clarifying different effects that might be caused by central banks’ monetary policy on asset markets; and (ii) Empirical impacts of SBV’s monetary policy on asset markets including stock market, gold market and real estate market in Vietnam. The paper concludes that these markets are influenced by many factors, and SBV’s monetary policy might not be the key factor determining their volatilities. This paper was prepared for webinar held in March 14, 2016, with the attendance of professor Marina Fedotova, Financial University under the Government of Russian Federation; Irina Melnikova-head of the self-regulatory organizations, agencies and actuarial rating activities, Development of financial markets Department, Bank of Russia; Nguyen Thanh Nhan-Deputy Dean, Faculty of Banking, Banking Academy, Hanoi, Vietnam.