Nguyen Thac Tam
Emerging from the collapse of its command economy, Vietnam succeeded in creating a conducive policy environment and building a strong new credit cooperative system. The government benefited from the experience of other countries but replicated none. Instead it came up with an innovation: cooperative self-help under state control, seemingly a contradiction. The newly established People's Credit Funds (PCFs) are self-managed and self-financed; yet their success is due to the central bank designing the new system, preparing its regulatory framework, providing training and supervision and enforcing prudential standards, while abstaining from undue interference. Regulation and supervision have been the state's instruments for assuring good performance, avoiding the disaster of the previous credit cooperative sector. The network overall has proved resilient during the global crisis, but with some differences between the rural PCFs and their central fund, which in addition to liquidity exchange also provides retail services in urban areas.