HISTORY OF BANKING- SRI LANKA

HISTORY OF BANKING IN SRI LANKA..

"To accommodate dynamic economic and financial system developments upon gaining independence in 1948, the post-independence Government of Ceylon established the Central Bank of Ceylon to maintain an active monetary policy regime and a dynamic financial sector to support and promote economic growth."

Prior to the establishment of the Central Bank, the Currency Board System set up under the Paper Currency Ordinance No.32 of 1884. It functioned as the country’s Monetary Authority, though very narrow in its capacity. This system was deemed inadequate for a developing country upon gaining political independence.  

To carry out this task, technical expertise to establish a central bank was sought from the USA in July 1948, with Mr. John Exter, an American economist from the Federal Reserve of USA being appointed. 

The Central Bank of Ceylon was established by the Monetary Law Act No.58 of 1949 and commenced operations on August 28, 1950. It was renamed the Central Bank of Sri Lanka in 1985.

💶The Central Bank was given wide powers to administer and regulate the entire money, banking and credit system of the country and also given the sole right and authority to issue currency.

The objectives of the Central Bank:-

• The maintenance of price stability.
• The maintenance of exchange rate stability.
• The promotion and maintenance of production, employment and real income.
• The encouragement and promotion of the full development of the productive resources.

Core objectives:-

    (1) The maintaining of economic and price stability.
    (2) The maintaining of financial system stability.

Founder governor:-

• Jhon exter 1950-1953 (founder governor)