On March 30, the SBV issued Official Dispatch 2342, requiring credit institutions to stabilize market interest rates. On April 9, the regulator held another meeting with the entire banking system to demand reductions in both deposit and lending rates to support businesses and citizens.

Following a resurgence of deposit rate hikes at certain banks, SBV further tightened monetary market discipline. On May 14, Official Dispatch 3972 was issued with the request to inspect the implementation of rate cuts at bank branches. Just one week later, on May 21, SBV followed up with Official Dispatch 4190, demanding strict adherence across the entire system and severe penalties for non-compliance

The frequency and urgency of these moves demonstrate the regulator's determination to keep capital costs stable for the economy.

For an economy where credit is currently equivalent to roughly 150 percent of GDP, the interest rate functions essentially as the “input cost” for all investment and production activities. As Vietnam targets double-digit growth, the demand for investment capital and production expansion will surge.

In this context, maintaining a stable interest rate floor becomes a vital condition to lower capital costs for enterprises and sustain growth.

However, behind the objective of keeping interest rates low lies a non-negligible liquidity pressure weighing on the banking system.

According to an SBV representative, by the end of April 2026, the total outstanding loans of the entire system had surpassed VND19.4 quadrillion, a year-on-year increase of over 18 percent.

SSI Research noted that the actual loan-to-deposit ratio (LDR) has currently risen to around 112 percent, far exceeding the regulatory threshold of 85 percent. In other words, the credit-to-deposit gap has reached about VND2 quadrillion.

The problem is that most banks’ mobilized capital remains short-term, whereas the demand for medium- and long-term loans is enormous. This mismatch makes the financial system far more sensitive to interest rate fluctuations.

Yet, what deserves deeper reflection is perhaps not the SBV's efforts to sustain low interest rates, but the fact that the economy's cash flow continues to tilt heavily toward assets rather than manufacturing.

In its recent report, the World Bank stated that real estate credit in 2025 surged by up to 42 percent, many times faster than the overall credit growth rate of the entire system. Currently, about 25.5 percent of total outstanding credit is tied up in the real estate sector, with roughly half of this amount allocated to property developers.

Meanwhile, credit granted to the industrial and agricultural sectors only grew by 12.1 percent and 9.1 percent, respectively.

In other words, the economy's capital flow is heavily leaning toward the asset sector rather than the sector that generates real wealth.

Vietnam is plunging into a "mega-urban area" wave of unprecedented scale. In 2025 alone, up to 27 mega-projects were commenced, deployed, or approved , with a total capital value of around $115 billion.

According to the Ministry of Construction, by the end of 2025, the country had 5.9 million housing units within real estate projects, representing a total investment value of up to VND7.42 quadrillion. This capital scale is significantly larger than the total investment capital of the entire economy in 2025.

This partially underscores the massive scale of urbanization and asset accumulation taking place in Vietnam. However, it also raises a major question about how efficiently the economy's cash flow is being utilized.

A tremendous amount of money is currently stranded in financial assets and real estate rather than cycling robustly back into manufacturing and consumption as it did in the past.

This is the great paradox of the current economy: credit is expanding aggressively, yet the manufacturing sector remains starved of capital, while housing prices in major cities drift further out of reach for many young people.

This stands as the greatest challenge in transitioning Vietnam's growth model today.

The economy must shift from a model heavily reliant on credit, assets and exports toward one driven more by productivity, technology   and the domestic private sector.

However, this transition is unfolding precisely when Vietnam needs to maintain a very high growth rate, large-scale infrastructure investments, and confront widespread global geopolitical volatility.

This is exactly why monetary policy currently finds itself walking a tightrope.

The moment interest rates bounce back up sharply, the pressure will immediately reverberate through businesses, asset markets, and the entire banking system.

But if cheap money is maintained for too long, capital flows may continue to flood into land, leaving the economy increasingly dependent on credit and real estate.

Tu Giang