Governor Nandalal says CBSL phasing out conflicting legacy roles

Asserts CBSL independency at 75th Anniversary Oration Busts myths, misconceptions, unrealistic expectations confronting CBSL Acknowledges conflicting roles of CBSL and plans to phase them out Says CBSL will gradually stop managing public debt, EPF and concessionary loan schemes for targeted sectors Points to break from contentious practices of the past, CBSL no longer supports fiscal expansion nor controls exchange rate

- By Devan Daniel

Asserts CBSL independency at 75th Anniversary Oration Busts myths, misconceptions, unrealistic expectations confronting CBSL Acknowledges conflicting roles of CBSL and plans to phase them out Says CBSL will gradually stop managing public debt, EPF and concessionary loan schemes for targeted sectors Points to break from contentious practices of the past, CBSL no longer supports fiscal expansion nor controls exchange rate Dr. Nandalal Weerasinghe yesterday busted prevailing misconceptions and myths about the role of the Central Bank of Sri Lanka (CBSL), explaining how recent legislative measures have bolstered its independence and laid the platform for the monetary authority to move away from conflicting legacy roles like managing public debt and initiating concessionary loan schemes for targeted industries and economic sectors.

Historically, the CBSL was tasked with multiple, often conflicting roles: controlling inflation (monetary policy), influencing interest and exchange rates, financing fiscal deficits (through money printing and deficit monetisation), and managing public debt. That overlap is exactly what weakened credibility and exposed the bank to criticism. But that all changed after the country's worst economic crisis, with Dr.

Weerasinghe being credited with the positive changes at the monetary authority.

Addressing the 75th Anniversary Oration of CBSL on 'Why Central Bank Independence Matters - in Crisis, in Recovery, and Beyond,' Dr. Weerasinghe also reiterated that CBSL was no longer managing the exchange rate, nor was it financing fiscal spending as in the past.

"Central Bank independence is not a new concept. Unfortunately, Sri Lanka had to learn about it the hard way only recently," he said.