Legal situation of early intervention measures for commercial banks in Vietnam

Abstract

The establishment of a legal framework for early intervention mechanisms in commercial banks is essential for timely addressing risks and weaknesses, thereby preventing systemic collapse. This issue is increasingly garnering attention from various countries, including Vietnam. Through the synthesis and analysis of both domestic and international documents, particularly Vietnam's regulatory framework concerning early intervention mechanisms for commercial banks, this article evaluates the current legal status of early intervention as outlined in Law on Credit Institutions in 2024. The evaluation focuses on: (1) Situations where early intervention is applicable to commercial banks; (2) Authorities responsible for early intervention; (3) Procedures and processes for implementing early intervention; (4) Measures for early intervention. Based on this evaluation, the article offers several observations regarding regulations on authority, applicable situations, sanctions for involved parties, and the role of deposit insurance in the early intervention process, aiming to enhance legal regulations and improve practical enforcement effectiveness.