Central Bank Governor Dr. Nandalal Weerasinghe said the Central Bank of Sri Lanka (CBSL) gained formal independence with the enactment of the Central Bank of Sri Lanka Act, No.16 of 2023, which came into effect in September last year, replacing the 73-year-old Monetary Law Act (MLA).
He noted that the new Act prohibits monetary financing and places strong emphasis on financial system stability and accountability.
“The replacement of the MLA with the new CBA has incorporated greater independence and accountability in the new legislation,” Dr. Weerasinghe said, delivering the 75th Anniversary Oration of the Central Bank of Sri Lanka in Colombo, titled “Why Central Bank Independence Matters – in Crisis, in Recovery, and Beyond.”
However, the Governor pointed out that since the CBA was only enacted in September 2023, many of the stabilization measures had to be carried out under the old MLA. “This underscores an important truth: even under the MLA, stability can be achieved when the Central Bank exercises its existing independence in strong coordination with the monetary authorities,” he added.
Dr. Weerasinghe stressed that stability has provided a solid foundation for people to rebuild their lives, which were severely impacted by past economic shocks and rate cuts.
He further underscored the importance of exchange rate stability, noting that the Sri Lanka Rupee must remain a reliable store of value and a standard of deferred payments, both domestically and internationally. “This was a quality the rupee held for almost a century until 1978, similar to other currencies that maintained stability for centuries, even as anchors shifted from silver to gold, and later to the US dollar,” he said.
