When central bank’s governor Nguyen Van Binh cited a famous economic
theory and claimed he could deserve half a Nobel Prize, many delegates laughed.
However, it later turned out the
governor who holds a Phd in economics from Russia used the trilemma theory in a
wrong way, which could indicate he either is ignorant or just used it to shun
responsibility.
After being criticized for SBV’s
tightened monetary policies at a National Assembly’s (NA) Q&A session last
week, Dr. Binh cited the trilemma theory to try to conclude that it was not his
fault.
Binh said the SBV’s polices faced
the problem of the "impossible trinity" or trilemma theory in
economics, which states that monetary policies cannot be deployed in order to
control inflation, maintain growth and stabilize the exchange rate at the same
time.
"The theorist of the “impossible
trinity" won a Nobel Prize for his discovery. But in Vietnam, SBV’s task
is to curb inflation and maintain a high growth rate at the same time.”
“I once joked with the NA
chairman that if I can do one of these well, I only need half of the Nobel Prize,"
Binh said.
But Robert Mundell won a Nobel
Prize in economics in 1999 for his pioneering work in monetary dynamics and
optimum currency areas, not the "impossible trinity”, Professor Tran Ngoc
Tho from the Ho Chi Minh City of Economics told Thoi Bao Kinh Te Saigon.
Worse, Nguyen Tri Dung, a member
of the macroeconomic policy advising group under the NA Economic Committee of
the National Assembly, said Binh didn’t understand the theory.
The governor cited three factors
as growth, inflation and the exchange rate, adding that it is impossible to
simultaneously accomplish the three goals but in fact the theory refers to the
three objectives: fixed exchange rate, national independence in monetary
policy, and capital mobility. Inflation and growth are not included in the said
theory.
“As such, there are two
possibilities: the governor doesn’t understand exactly the theory, or trying to
get sympathy to dodge the question of the NA delegate”, Dung added.
THOAI TRAN
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