Central bank of Sri Lanka

The Central Bank of Sri Lanka (CBSL)is the monetary authority of Sri Lanka and the apex institution in the country's financial sector. Established in 1950 under the Monetary Law Act No.58 of 1949 (MLA), it is a government owned semi-autonomous body, and following the amendments to the MLA in December 2002, is governed by a five-member Monetary Board, comprising the Governor as chairman, the Secretary to the Ministry of Finance and Planning, and three members appointed by the President of Sri Lanka, on the recommendation of the Minister of Finance, with the concurrence of the Constitutional Council.


History of central bank

The Central Bank of Sri Lanka was established in 1950, two years after independence. The founder governor of the Central Bank of Sri Lanka was Jhon Exter, while the minister of finance at the time was J.R. Jayawardene. Under the former name of Central Bank of Ceylon, it replaced the Currency Board that until then had been responsible for issuing the country's money. It is a member of the Asian Clearing Union.

 there are two main objectives of the central bank.

  • maintaining price and economic stability.
  • maintaining financial system stability.
The bank is responsible for the conduct of monetary policy Sri Lanka and also has wide supervisory powers over the Financial system.

Functions of a central bank:

·         implementing monetary policies.

·         setting the official interest rate – used to manage both inflation and the country's exchange rate and ensuring that this rate takes effect via a variety of policy mechanisms

·         controlling the nation's entire money supply

·         the Government's banker and the bankers' bank

·         managing the country's foreign exchange and gold reserves and the Government bonds

·         regulating and supervising the banking industry
Organizational structure

The Governor of the CBSL functions as its chief executive officer. The governor, two deputy governors and several assistant governors, along with the heads of departments, form the senior management of the CBSL. Functionally, the CBSL presently consists of 27 departments, each headed by a director (or equivalent), reporting to the governor or the deputy governor through an assistant governor, with the exception of the Management Audit Department, which reports directly to the governor.


Central Bank of Sri Lanka Building
The Economic Research and Bank Supervision Departments were explicitly set up under the original legislation establishing the CBSL, with certain statutory functions. The Economic Research Department is required to compile data and conduct economic research for the guidance of the Monetary Board and for the information of the public, while the Bank Supervision Department is required to engage in the continuous regulation and supervision of all banking institutions in Sri Lanka.





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