The Central Bank

Excerpted from N.U. JAYAWARDENA The first five decades

- By Kumari JAYAWARDENA AND JENNIFER MORAGODA

One of the two departments that had been expressly provided for in the Monetary Law Act was the Department of Economic Research (the other was the Department of Banking Supervision).( The Exter Report stated that the functions of the Exchange Control Department which were presently functioning under the Treasury, were “better left to the determination of the Monetary Board,” however added that, “in other countries (which have an exchange control department), central banks ordinarily do the bulk of the work of operating the exchange control” (see Exter Report, p. 21). According to the Exter Report, the department had been “given special recognition in the... law in order to emphasise its importance:”

While there may be a tendency in highly developed countries to attach too much importance to economic research, the opposite is more likely to be true in underdeveloped countries... It may not be too much to say that the solid achievements of the Central Bank in years to come will depend as much upon the successful development of this department as upon anything else. (Exter Report, p.18)

Intellectuals such as the lawyer and historian, Colvin R. de Silva, echoed these sentiments and commended the Research Department as an “excellent” feature of the bill:

The express provisions for the creation of a Department of Economic Research is something to be welcomed without reserve. In our country, we have always suffered from the absence of authoritative statistics, from the absence of proper, relevant, daytoday information for the economic studies relevant to current developments. (Hansard, 24 Nov. 1949, p.832)