Funday Times - Our Heritage

Central Bank celebrates 60th anniversary

Gaveshaka traces the progress of the 'big bank'

The Central Bank of Sri Lanka – the 'bank of banks' – is celebrating its 60th anniversary. Established in 1950, the Central Bank is responsible for the issue of currency and for the country's monetary policy which includes setting interest rates as well as supervising commercial banks and other financial institutions like finance companies.

It also manages Sri Lanka's foreign reserves and government debt. The Central Bank was established under the Monetary Law Act (MLA) No. 58 of 1949 and commenced operations on August 28, 1950. First known as the Central Bank of Ceylon, the name was changed to the Central Bank of Sri Lanka in 1985.

At the time the Bank was established, J. R. Jayewardene was the Minister of Finance serving in the D. S. Senanayake Cabinet. An American economist John Exter was the first Governor (chief executive officer) of the Bank holding that post for three years.

While serving in the Federal Reserve Board of the USA, he was sent here when the government requested the United States Government for technical expertise to set up a central bank. This was immediately after the country gained Independence and the government felt that a suitable institution should be established to manage the monetary policy. The Currency Board which had been set up in 1884 by the British colonial

administration to be responsible for issuing the country's money was found inadequate to meet the needs of an emerging nation.

The Central Bank is a semi-autonomous body and 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.

The CBSL has the sole right and authority to issue currency in Sri Lanka which includes both
currency notes and coins. The Bank is entrusted with designing, printing and distributing of Sri Lanka's bank notes and minting of coins.

The purpose of currency management is to build and maintain public confidence in the currency by preserving its value and integrity and by making available adequate stocks to meet the demand for currency, which is essential for the proper functioning of the economy.

During the first three decades, the CBSL was restricted to Colombo for its operations. Since then it has expanded its operations to the outstations.Provincial network With a view to promoting regional
economic activities with the assistance of the banking sector, the CBSL decided to set up a network of provincial offices.

The first such office (then known as Regional Office) was opened at Matara in 1981, followed by offices at Anuradhapura (1982) and Matale (1985). With a view to enhancing the development activities in the Northern Province, CBSL opened its fourth provincial office in Jaffna on July 4, 2010.

These offices have also helped the Bank to be in line with the provincial administration system of the country. Each provincial office covers several districts in that particular province.

The CBSL building in Fort was destroyed in a bomb attack by the LTTE in 1996. Since then it has been rebuilt. Several programmes have been organised in the coming months to commemorate the 60th anniversary. This programme was launched with the release of a Rs. 10 stamp.

During the 60-year history of the Bank, twelve Governors have served in the capacity of chief executive officer of the institution.

  • John Exter (1950 – 1953)
  • N.U. Jayawardena (1953 – 1954)
  • Sir Arthur Ranasinghe (1954 – 1959)
  • D.W. Rajapatirana (1959 – 1967)
  • W. Tennekoon (1967 – 1971)
  • H.E. Tennekoon (1971 – 1979)
  • W. Rasaputram (1979 – 1988)
  • H.N.S. Karunatilake (1988 – 1992)
  • H.B. Dissanayaka (1992 – 1995)
  • A.S. Jayawardana (1995 – 2004)
  • Sunil Mendis (2004 – 2006)

The present Governor Ajith Nivard Cabraal was appointed in 2006.

The districts covered are:

Matara: Southern Province – Galle, Matara, Hambantota and Monaragala

Anuradhapura: North Central Province – Anuradhapura, Polonnaruwa

Matale: Central Province – Kandy, Matale, Nuwara Eliya and Badulla

Jaffna: Northern Province – Jaffna, Mullaitivu, Kilinochchi, Mannar and Vavuniya

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