The Vietnamese dong

Who issues the dong and since when

Decree 15/SL of 6 May 1951 created the State Bank of Vietnam and moved the issue of money from the Ministry of Finance to the new bank. From 1945 to 1951 the ministry had issued what were called financial notes, which circulated beside regional notes and bonds during the resistance war. The bank replaced them with notes of its own in a unit called the dong, known at the time as bank money.

The dong itself is older than the bank. In 1946 the Viet Minh government, later the government of North Vietnam, introduced it in place of the French Indochinese piastre, at par. The piastre had been the currency of French Indochina since 1885.

How two dongs became one

The north revalued its dong twice. The second revaluation, in 1959, exchanged one new note for 1,000 old ones, and the new notes carried the national emblem. The south took another route. Notes denominated in both piastres and dong were issued in 1953 for the State of Vietnam, which became South Vietnam in 1954. After the fall of Saigon, on 22 September 1975, the south switched to a liberation dong worth 500 old southern dong.

Reunification in 1975 left the country with two monetary systems for three more years. On 25 April 1978 the decision was taken to unify the currency, and the single dong went into use on 3 May 1978. The 1978 series showed workers, farmers and soldiers.

Why the revaluation after reunification went wrong

In September 1985 the dong was revalued again, one new dong for ten old ones, as part of a wider adjustment of prices, wages and money meant to stabilise purchasing power. Vietnamese economists at the time expected the revaluation to strengthen the currency. It had the opposite effect. Savings were wiped out and inflation climbed to a peak in September 1986. The Đổi Mới reforms that began that year steadied prices, especially through the 1990s and early 2000s, and the State Bank met the growing economy with higher denominations, up to 100,000 dong by the 1990s.

Large payments needed something bigger still. From 1992 to 2002 the bank issued bearer's checks, settlement notes worth from 100,000 to 5,000,000 dong, whose designs changed every five to six months and which expired five or six months after issue. They lasted until the banking system could move large sums electronically.

What replaced coins and cotton notes

Coins have come and gone twice. Aluminium coins of 1, 2 and 5 hao and 1 dong, dated 1976 and struck by the Berlin Mint in East Germany, arrived in 1978 and lost all meaningful value in the inflation of the 1980s. The hao, a tenth of a dong, and the xu, a tenth of a hao, fell out of use for the same reason. On 17 December 2003 the State Bank resumed coins with 200, 500, 1,000, 2,000 and 5,000 dong pieces minted in Finland. Until then, buyers at vending machines had swapped notes for tokens at a counter. Some banks refused to take coin deposits, laws had to require them to handle coins, and the public never took to them. The bank withdrew coins from distribution in April 2011.

Polymer notes arrived in December 2003. The authorities said plastic would cut printing costs, and the bank now uses polymer for 10,000 dong and higher, up to the dark blue 500,000 dong note in circulation since 2003. The switch drew criticism. Newspapers reported printing mistakes and alleged that the son of the bank's then governor had benefited from the printing contracts; the government barred two newspapers from publishing for a month. The bank has also issued commemorative notes: a polymer 50 dong in 2001 for its fiftieth anniversary and a paper 100 dong in 2016 for the sixty-fifth.