Central Bank of Sri Lanka

Vision

“A credible and dynamic central bank contributing to the prosperity of Sri Lanka.”

Mission

"Maintaining economic and price stability and financial system stability to support sustainable growth through policy stimulus, advice, commitment and excellence.”

The Central Bank of Sri Lanka (CBSL) is the apex institution in the financial sector in Sri Lanka. Prior to the establishment of the Central Bank, functions relating to central banking were conducted by the Currency Board System that was set up under the Paper Currency Ordinance No. 32 of 1884.

In July 1948, the Government of Ceylon requested the United States Government for technical expertise to set up a central bank. 

Mr. John Exter. An economist from the Federal Reserve Board of the USA being appointed to carry out the task. 

The Central Bank of Ceylon was established by the Monetary Law Act No. 58 of 1949. 

Commenced operations on August 28, 1950. 

It was renamed the Central Bank of Sri Lanka in 1985. 

Central Bank has two core objectives. They are, 

• Maintaining economic and price stability 

Price stability safeguards the value of the currency in terms of what it will purchase at home and in terms of other currencies. 

Price stability or stable prices means low inflation. 

Low inflation or price stability fosters sustainable long-term economic growth and employment. 

The Central Bank uses monetary policy measures to control inflation 

• Maintaining financial system stability 

Financial system stability means the effective functioning of the financial system 

Financial instability is caused by bank failures, excessive asset price volatility, and collapse of market liquidity or a disruption to the payments system 

A stable financial system creates a favorable environment for depositors and investors 

   

Monetary Law Act, No. 58 of 1949 

An Act to establish the monetary system of Sri Lanka and the Central Bank to administer and regulate the system and to confer and impose upon the Monetary Board of the Central Bank powers, functions and responsibilities necessary for the purpose of such administration and regulation, and to provide for connected matters. 

Key roles and responsibilities of Central Bank 

• Conduct of Exchange Rate Policy

• Management of the Official International Reserves

• Oversight of the Financial System

• Licensing, Regulating, Supervising of Banks and selected Non-Bank Financial Institutions

• Provisions of Settlement Facilities and the Regulation of the Payment System

• Issue and Distribution of the National Currency

• Compilation, Dissemination and Analysis of Economic Data and Statistics

• Banker to the Government and its agencies, and provision of current account facilities to LCBs and non-commercial bank Primary Dealers of Government Securities

In addition to that, the CBSL performs the following agency functions on behalf of the government of Sri Lanka 

• Management of the Public Debt

• Foreign Exchange Management

• Fund management and the Custodian of the Employees’ Provident Fund

• Facilitating Financial Inclusion Financial Intelligence services to prevent, detect, investigate and prosecute Money Laundering and Terrorist Financing