New Act will promote accountability on the part of CBSL

– Governor Dr. Nandalal Weerasinghe

By Hiran H. Senewiratne

The New CBSL Act will promote accountability on the part of the CBSL and provide for its independence, Governor, Central Bank of Sri Lanka Dr. Nandalal Weerasinghe said.Making a presentation yesterday on the New CBSL Act at the Centre for Banking Studies in Rajagiriya, the CBSL Governor said that Sri Lanka is in dire financial straits today because it was not allowed to act independently over the decades by governments.

Following are some extracts from Dr. Weerasinghe’s presentation: ‘For the last 72 years the CBSL has failed to control inflation. This is mainly because the CBSL was wrongly influenced by successive governments to suppress the dollar, while not allowing market forces to determine the parity rate of the rupee against the dollar. This deleterious trend has been particularly noticeable since 1977.

‘Besides, bank interest rates were set by governments at their whims and fancies. However, some of these flaws could be remedied by the flexible inflation targeting framework which would be introduced by the New CBSL Act. The latter will also promote independence and accountability on the part of the CBSL.’

(Full report on Monday)

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