quote Private credit is a major problem for the Vietnamese government. Growing from 40% of GDP in 2001 to over 120% of GDP in 2011, it now holds the world-record for debt creation. The government are also keen to clamp down on the type of deposits received by banks. Many commentators mention with the surprise the ease with which citizens are able to switch between the dong, the dollar and gold. In order to reduce this, the central bank last year lowered the interest received for dollar deposits to 3% and maintained the rate at 14% for dong deposits. The government's reasons for preventing the use of gold as a medium of exchange are officially to try and steady the shaky dong. Despite the introduction of Resolution 11, the dong has gained in strength by 0.8%, after a four-year decline of 26%. Meanwhile March's inflation figures showed levels of 14%, down 9% since August last year. Some expect inflation to head below 10% by the end of this year. So are Resolution 11's austerity measures and inflation-reducing drives enough to bring the country's economy under control and transfer citizens' faith from the world's oldest money to the Vietnamese dong? High gold demand in Vietnam The Vietnamese are big gold-buyers; the decree comes in light of information that in March the gold price in dong rose faster than the global reference price (dollar/troy ounce). A WGC report stated the Vietnamese gold price had climbed 18%, compared to the global price climb of 11% in the last year. In the decree, locals may still buy, sell and own gold, but gold may not be used as a means of payment. This may cause issue for the general public and companies as in 2011 gold was more widely used than any other currency in Vietnam. The country owns more gold per capita than either India or China; the http://www.kitco.com/ind/Skoyles/20120413.html
