This research examines the transmission mechanism of monetary policy and the circular economy in Vietnam from 2000 to 2020, utilizing the Bernanke and Mihov approach and a semi-structured vector autoregression (SVAR) model. The study identifies exogenous shocks to monetary policy beyond the control of the State Bank of Vietnam. The results indicate that monetary easing shocks lead to an economic growth recovery after four quarters but result in a significant increase in the discount rate. Surprisingly, the consumer price index initially shows no response, posing difficulties in monetary transmission. Additionally, the analysis of exchange rate shocks reveals substantial pressure on the domestic currency to depreciate, with nominal exchange rate adjustments displaying signs of overcontrol. The monetary policy index closely associates changes in the State Bank’s response with innovations in the exchange rate. This research highlights the intricate dynamics of monetary policy shocks in Vietnam and their impact on the circular economy.