BEGINNING OF THE BANKING OF SRI LANKA
I n 1948, the post-independence Government of Ceylon (as Sri Lanka was then known) 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 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. Technical expertise to establish a central bank was sought from the United States of America (USA) in July 1948, with Mr. John Exter, an American economist from the Federal Reserve of USA being appointed to carry out this task. The Central Bank was given wide powers to administer and regulate the entire money, banking and credit system of the country. The Central Bank was also given the sole right and authority to issue...