Unlike many other central banks in countries with free-market economies, the State Bank does not have the freedom to write its own policy.

Key decisions on monetary policy, such as interest and foreign exchange rates, are handed down to the State Bank from higher authorities, who also want to steer industrial policy through target lending.

It is a State Bank responsibility to top-up state industries racked by bad debt, despite the fact that doing so wins little credit from international lenders or Vietnamese savers, who have long been distrustful of the local banking system.

Party leaders concede there is about US$5 billion in gold, dollars and other currencies floating outside the banking system.

'The State Bank must supervise lending to state industries but at the same time tell local commercial banks that they have got to keep lending,' said one Western banker.

Strict orders for the central bank to maintain tight money supply have helped to screw down inflation.

In 1986, the year in which Vietnam first adopted its policy of doi moi, or economic renovation, inflation was 775 per cent. Now it is single digit.

The same policy has maintained face value of the Vietnamese dong but done little to wean people off their dependence on the dollar, the only currency Vietnamese people believe has lasting value.

However, bankers said the State Bank might find in Mr Dung, who is also deputy prime minister in charge of the economy, a man who can create a little more room to manoeuvre.

Born in the business-minded south, his rapid rise has in many ways mirrored that in China of Premier Zhu Rongji, who at one time ran the central bank there.

Already the most senior among Vietnam's five deputy prime ministers, Mr Dung is also a member of the powerful Politburo, the ruling Communist Party's policy-setting body.

A stint as vice-minister in the Interior Ministry confers him with the kind of political clout and agility not before seen in a central bank governor.

Prime Minister Phan Van Khai said: 'He should be able to gather support from government departments and ministries, the party and the people to improve our banking system.' The spotlight on political skills has come as a disappointment to some who fear that Mr Dung, who has not been a banker before, will focus on improving links between the bank and other ministries and fail to grasp tough nuts-and-bolts banking problems, not least of which is the value and convertibility of the dong.

In a knee-jerk reaction to the region's financial meltdown, Vietnam restricted access to hard currency to selected industries in a bid to conserve thin central bank reserves.

The dong has been weakened by 10 per cent since October.

Currency reserves and other basic indicators, though freely published elsewhere, are classed as state secrets in Vietnam.

The government banned the import of certain goods in another step to save the State Bank - which promises to act as 'lender of last resort' to commercial banks short of cash - from having to cover repayment on too many trade credits.

Foreign-currency trading on the local interbank market has been at a virtual standstill for a year, a symptom of a general dollar shortfall.

Standard Chartered Bank former treasury head Peter McLean said in Hanoi: 'In the forefront of every investor's mind at the moment is currency availability.

'They [investors] can't get comfortable with the fact that. although they might have foreign exchange approval or convertibility rights, it is meaningless if there is not enough currency available in the system.'