Exchange Rate Management - Why did Sri Lanka fail? Let us find.

The exchange rate has become a new talking point in the world in the middle of fast monetary tightening by central banks led by the US Fed and other leading central banks. For example, significant appreciation of the US Dollar in international currency markets these days has become a major stress in the global economy. Meanwhile, the sudden tumble of the Sterling Pound to historic low level in the last week (on 27 September) consequent to speculations created on the record tax cuts-based mini budget of the UK new government is a new noise in the global economy.

The exchange rate is a day-to-day issue confronted in macroeconomic management in all developing countries from the inception of their central banks because of heavy dependence of the respective domestic economies on imports and foreign capital.

However, the subject of the exchange rate has a wide theoretical and empirical literature in economics. Therefore, economics as well as politics of the exchange rate are highly confused as to what policies the policymakers should follow in the interest of the national economy. This is well-understood from diverse views presently expressed by Economics Professors, practicing economists, Central Bank officials and political leaders on the exchange rate of Sri Lankan currency which has collapsed in the present currency/BOP crisis.

Therefore, the objective of this article is to present fundamental aspects of determination of the exchange rate that should be considered when the country policymakers attempt to intervene in the exchange rate in the respective domestic interests because the misconceived intervention in conventional models is now proved to devastate the economies and living standards, as already experienced in Sri Lanka and many developing countries in the global literature.

Exchange Rate Determination – Some Economics

In economics, exchange rate is another price in the economy. Any economy is an aggregate of many markets for goods, services and factors and, therefore, many markets operate in the economy. The economics of exchange rate covers several concepts.

The fundamental economic theory states that the price in any market is determined by the interaction of the demand and supply forces operating in the market. This is a simple application of the microeconomic theory of free market and equilibrium for a commodity. Accordingly, there are markets for trade of national currencies against other national currencies for various purposes such as the use for international payments as well as a means of liquid asset.

In the currency trade market of any country, the local currency is bought and sold for foreign currencies primarily for international trade in goods, services and capital between the country and foreign countries. However, this trade in almost all developing countries is carried on the US dollar as it is the most popular global reserve, transaction and invoicing currency. Therefore, the key exchange rate operating in these countries is the rate for the US Dollar, i.e., Rs. per US$ in Sri Lanka. Accordingly, the exchange rates for other foreign currencies are determined manually as cross currency rates from the exchange rates between the US Dollar and other currencies quoted in international markets.

In this model, the demand for the US$ in the country arises for foreign payments such as imports, foreign debt service and foreign capital outflow. In opposite, the supply of the US$ in the country sources from exports, foreign capital inflow and remittance inflow. The demand exerts the pressure on the exchange rate to rise while the supply impacts the exchange rate to fall if the market is free to operate. Therefore, the exchange rate will move up and down depending on the net pressure of demand and supply. The increase in the exchange rate is termed as the depreciation of the local currency or the appreciation of the US$.

As such, the rate of increase in Sri Lankan exchange rate is 83% at present from 7 March 2022, i.e., from Rs. 200 on 7 March 2022 to Rs. 365 at present. Everybody knows the reason for such a high currency depreciation. The significant reduction in US Dollar supply consequent to the fall of foreign capital, worker remittances and tourism while the demand for US Dollars continued to rise for foreign debt service and escalation of energy imports (even if imports were restricted) was the reason.

However, this model does not consider the causes that directly impact on the exchange rate itself because the commodity markets models assume that the cost of production that sets the price remains unchanged when the quantities of demand and supply change and, therefore, the price determined in the market is a purely demand and supply outcome. However, in the real-world producers change the prices directly on account of the cost of production, productivity and other factors that affect their production or market conditions.

Similarly, exchange rates are quoted for buying and selling by banks and dealers on rates they determine by taking into account consideration the business and conditions whereas demand and supply conditions then drive the rates through the trade. Currency dealer speculations, market interest rates, central bank regulations and interventions, etc., directly cause banks to revise exchange rates outside demand and supply forces. Banks and dealers bear a cost to hold foreign currency which will be reflective in the exchange rate. 

For example, as they have to pay for foreign currency out of their local currency assets, the cost is the forgone local interest income over the interest income receivable on foreign currency assets. Therefore, when local interest rates rise, banks raise the exchange rate to cover the increased local interest cost. Further, when the central bank issues a direction prescribing the lowest buying rate and maximum selling rate, banks quote exchange rates in that corridor. Therefore, demand and supply forces start responding exchange rates quoted by banks/currency traders based on costs and speculations. Therefore, the view that the exchange rate is determined by demand and supply is only half-correct.

Interest differential, inflation differential monetary growth differential between the two countries involved in the exchange rate are the other major concepts used to explain the movements in exchange rates. These concepts are applicable to largely open economies with flexible exchange rates.

• First, when interest differential between the home country and foreign country rises, home country currency will appreciate due to inflow of foreign capital on account of higher interest rate.

• Second, if inflation differential rises because of rising inflation in the home country, the home currency will depreciate due to rising trade deficit on the ground that higher inflation raises imports and lowers exports.

• Third, if monetary growth differential between the home and foreign country rises due to higher money supply growth of the home country, the home currency will become cheaper as against the foreign currency. This means that home currency depreciation or more units of home currency are required to buy one unit of foreign currency. The operating channel here is the increased trade deficit of the home country due to higher money stock that would raise imports.

However, movements of the Sri Lankan exchange rate for the US Dollar cannot be explained by any of these differentials as the Sri Lanka and the US are not competitive trade partners. Further, movements of Sri Lankan exchange rates for other foreign currencies such as Indian Rupee and Sterling Pounds also cannot be explained by these differentials between Sri Lanka and respective foreign country as trade and investments flows take place in US dollars and not between those country currencies. 

However, changes in interest rates, inflation and monetary growth in Sri Lanka as compared to its trading partners in general will affect the competitiveness of Sri Lankan economy in the international trade and capital flow and then will impact on the exchange rate through the underlying demand for and supply of US Dollars arising from the connected BOP transactions.

For example, when interest rates in Sri Lanka rise faster than the interest rates of countries in the region, more foreign capital may inflow into Sri Lanka from the region and cause an appreciation of Sri Lankan currency due to new supply of US Dollars underlying the capital inflow. Therefore, all developing countries these days are raising interest rates to fight their currency depreciations due to capital outflows to developed countries as a result of significant increases in interest rates by central banks led by the US Fed.

However, although these concepts can explain the movements of exchange rates from time to time, none can explain why same US Dollar currency has different exchange rates for different currencies and why exchange rates between currencies are different numbers. The economic concept applied here is the law of one price or purchasing power parity theory which shows, subject to several assumptions, that the exchange rate is determined at a level that prices expressed in one currency are equal between the two countries. 

Accordingly, the exchange rate is the ratio of prices of the two countries. Therefore, this explains why the US dollar exchange rate is different for currencies, for example, 364 Sri Lanka Rupees, 82 Indian Rupees, 145 yen, 1,441 Korean Won, 15,321 Indonesian Rupiah and 1,512 Lebanon pound. However, these exchange rate numbers are difficult to be calculated from relevant price information of the respective countries.

However, this concept of law of one price implies that the exchange rate is a result of the price levels prevailing between the two countries. As the price level is a result of all markets in the economy, the exchange rate is a result of the whole economy on the production, exports, imports, capital flows, investments, savings and consumption because demand for and supply of foreign currency as analyzed at present to explain the movements of the exchange rate cannot be separated from the above mentioned domestic economic activities and related factors.

Intervention in the Exchange Rate

Monetary authorities in almost all developing countries have the historical habit of intervening in the exchange rate to be maintained at levels they consider desirable while developed countries have abandoned the intervention since 1990s by allowing market determined exchange rates or flexible exchange rates.

The intervention is the buying and selling of the US Dollar in the market by the central bank to maintain the exchange rates at specific levels or trend outside the market demand and supply factors. Such intervention can be for a fixed rate or a rate corridor (managed float). As such, the exchange rate becomes a controlled price not different from other price controls. It is simple economics that the price of a commodity cannot be controlled unless the government has the ability to maintain adequate buffer stocks, i.e., buying the commodity when its price tends to go down the controlled price and selling the commodity when its price tends to go above the controlled price.

The buffer stock with regard to exchange rate control is the foreign currency reserve. Therefore, a central bank without a foreign currency reserve, for example, Central Bank of Sri Lanka at present, has no ability to intervene in the exchange rate. The foreign reserve buffer is built from the purchases of foreign currency by the Central Bank while the reserve depletes when the Central Bank sells foreign currency out of the reserve. This intervention has three side economic effects.

• First, when the central bank purchases US Dollars from the market/banks, it artificially pushes the demand US Dollars outside the market and prevents the level of the currency appreciation than that would otherwise be. As a result, the local currency is kept under-valued or at a higher exchange rate than that would otherwise be. This favors exporters as their proceeds in Rupees are protected from falling. The strategy adopted by China for past decades has been the under-valued exchange rate for continued BOP surplus that helped accumulation of over US$ 3 trillion worth of foreign reserve.

• Second, when the central bank supplies or sells US Dollars to the market/banks, it artificially prevents the depreciation of the domestic currency than that would otherwise be in the market. As a result, local currency will be kept artificially over-valued or at a lower exchange rate than that would otherwise be. This favors the imports and debt services with lower cost in domestic currency. This is the nature of currency intervention that has taken place for long time in Sri Lanka that has led to the collapse of the foreign reserve from the 3rd quarter of 2020, the present currency crisis, foreign debt default and economic bankruptcy in Sri Lanka.

• Third, the intervention causes protracted BOP imbalances due to over-valued or under-valued exchange rate depending on its scale and the loss of the monetary policy independence for domestic sector due to resulting changes in the money supply on account of BOP financing. As central banks have mechanism to project the market clearing exchange rates, the existence of under-valued or over-valued exchange rates is reflective from the BOP imbalances. Therefore, the protracted, large BOP deficit in Sri Lanka is a testimony for the unsustainable level of over-valued exchange rate maintained by the Central Bank. Therefore, the space of the monetary policy available to support the domestic economy through credit has been severely restrictive.

Therefore, the key question that should be asked from central banks who intervene in the exchange rate is how sustainable their foreign reserves are. For example, Sri Lankan central bank has maintained its foreign reserve through foreign borrowing raised by itself as the debt manager to the government as the trade/current account in the BOP has been a large deficit throughout the history. As such, the foreign reserve was a ponzy scheme. Therefore, the currency intervention in this manner (over-valued exchange rate on a ponzy type foreign reserve) is an economically flawed and financially risky monetary policy in several ways.

• First, it assisted imports and foreign borrowing through the subsidy provided by the over-valued exchange rate.

• Second, it prevented the currency depreciation required to ease the chronic trade/current account deficit in the country.

• Third, it caused a foreign debt trap by building a reserve to finance the BOP deficits at subsidized exchange rates. This is the fundamental cause of the present economic crisis and bankruptcy confronted by Sri Lanka.

However, China and several other countries who have built foreign reserve buffers through the surplus in the trade/current account and long-term capital inflow have the ability of the intervening in the exchange rates to suit contemporary needs such as the exchange rate stability.

Therefore, the government and Central Bank in Sri Lanka trying to repair the foreign borrowing and aid channel again to build the foreign reserve and to appreciate the currency for the purpose of reducing inflationary pressures and rescuing the economy with imports is nothing but an attempt to commit same macroeconomic policy mistake they did and caused the present economic crisis.

Therefore, it appears that they both do not have the general knowledge in exchange rate economics other than trying to manipulate the exchange rate through some factors such as imports, remittances and foreign borrowing/capital in an ad hoc manner without driving the economy to generate a foreign currency surplus. Further, the exchange rate targeted for the intervention by central banks has no economic basis other than highly judgmental stance not supported by the overall economy that determines its competitiveness to generate a foreign surplus. 

However, there is no mathematical formula or rocket science to decide what exchange rate is most favourable for country's economic interests. Therefore, the pre-condition is to decide on to what extent the authorities are prepared to accept market determined exchange rates and have their home work to intervene in the market if the market rates are not preferred. Therefore, the intervention in the exchange rate is not just a momentarily sit-down job with highly market sensitive information.

Exchange Rate Intervention and Monetary Conditions

In the gold standard based monetary systems up to 1950s in the world, exchange rates were not important as all currencies existed on the convertibility into gold in certain proportions. Therefore, the gold being a real asset determined the exchange rates of currencies. In that time, as balance of payment deficits or surpluses were settled through the gold, the currency/money stock in the surplus country rose proportionately to the gold receipt while that of the deficit country fell.

Therefore, this gold settlement based monetary system had an underlying automatic mechanism to inflate prices in the surplus country consequent to the monetary expansion where the country loses the competitiveness in the trade causing a deficit in the next phase of the cycle. Further, the currency systems were free at the hands of commercial banks and, therefore, the government had no regulator to intervene in the gold exchange rate or balance of payment imbalances.

However, when the countries started fiat/state currencies with sovereign powers and exchanging with other currencies at exchange rates fixed by the authorities, the automatic mechanism between the money stock and the balance of payment was lost. Therefore, governments started manipulating the money printing/money stock and exchange rates arbitrarily for domestic objectives. Under the Bretton Woods Agreement in 1944 with the International Monetary Fund (IMF) until 1971, countries pegged their currencies to the US Dollar and attempted to maintain the exchange rate under the supervision of the IMF. Therefore, balance of payments was settled through the movement of US Dollars between the countries.

As a result, the US Dollar emerged as the global reserve currency. Therefore, the build-up of US Dollar reserve through trade and capital transactions became a factor in determining the money stock in the country monetary systems. Accordingly, country authorities started following monetary policies including intervention in exchange rates to build US Dollar reserves to show the international strength of the respective countries in the global economy. This led to the manipulation of domestic currency, foreign currency and exchange rate in the monetary policy operations by the central banks.

In this practice, the source of most of the money printing and money supply became the foreign currency reserve where many developing countries lost the domestic monetary independence to the debt-driven foreign reserve and balance of payments. For example, the foreign currency reserve accounted for nearly 80%-90% of assets of the Central Bank in Sri Lanka. Therefore, central banks started squeezing domestic credit to facilitate foreign reserves and borrowing within the tight monetary growth targets adopted to control inflation at arbitrary targets. Therefore, monetary policy operations have largely been carried out to manage foreign currency flows for the balance of payment purposes while the domestic economy was ignored in the credit creation and distribution.

Therefore, exchange rate has been the de facto target in the monetary policy although central banks announced policy interest rates corridors as operating targets. In fact, under the managed float exchange rate systems, the announced exchange rate corridor is the focus of the monetary policy operations. Even under the free float variants that have been adopted in the past two decades, the intervention in the exchange rate without specific targets has got prioritized over the policy interest rates as these policy rates were largely used to mobilize foreign capital to domestic financial markets for the foreign reserve and financing the BOP deficits.

In this system, domestic monetary policy has been to facilitate overnight inter-bank liquidity management in line with the foreign currency flows. As such, bank credit system also became active on transactions connected to the foreign trade and capital where the monetary system and the BOP were closely inter-linked through the monetary policy and bank credit. As such, most central banks in developing countries are de facto Currency Boards.

This monetary policy approach has been the reason for Sri Lanka and many developing countries to neglect the promotion of the domestic resources and economy required for the generation of a foreign currency surplus supported by bank credit across the economy. It is this monetary policy error that has led Sri Lanka and several countries to the present foreign currency crisis and bankruptcy. The default of foreign debt is the eventual result of the policy error in controlling the exchange rate in microeconomics.

However, both government and central bank still attempt to recover from the crisis through same erroneous monetary policy model by raising interest rates to the rock peak and controlling the exchange rate with a non-functioning foreign currency market. The inflow of foreign capital and other foreign currency flows cannot be expected in a bankrupt economy even if interest rates are raised to 500%. Therefore, the eventual outcome of this erroneous super-tight monetary policy would be nothing but the collapse of the domestic economy and a banking crisis sooner or later.

Foreign Exchange Policy Background in Sri Lanka

The Monetary Law Act (MLA) and Foreign Exchange Act (FEA) (and Exchange Control Act until 2018 - ECA) provide for the policy framework. The FEA is the governing law to regulate foreign exchange transactions or the supply and demand in the market. The MLA provides for the framework for determination of the exchange rate or the market price in the macroeconomic context of the monetary policy. The MLA also contains specific policy instruments supporting the exchange rate policy. However, the MLA does not separate the intervention in the exchange rate from the wider objectives and implementation of the monetary policy.

However, the Central Bank has mostly followed an ad-hoc or standalone approach to the exchange rate policy as it was managed by the government foreign debt-based foreign currency reserve. Further, the exchange control mechanism under the ECA and FEA has largely been transaction specific red tapes without any regard to the macroeconomic role of the foreign currency market, i.e., exchange rate and demand and supply forces.

In fact, the ECA being a criminal legislation separated the foreign sector from the domestic sector of the economy without any rationale in macroeconomics of modern open economies where the exchange control officials did not practice economics although some were leading economists. They could not understand that foreign exchange policies are to facilitate the link between the domestic sector and foreign sector of the economy for funding its savings-investment gap in a global economy.

As such, Sri Lankan economy could not integrate into the global economy on the strength and competitiveness of the domestic resources supported by the fiscal and monetary policies. Instead, the Central Bank resorted to a debt driven foreign reserve to manage the exchange rate and BOP financing. This is the chronic policy failure behind the present economic crisis in Sri Lanka and several countries. However, the government and Central Bank continue to resort to same erroneous policy model to recover from the economic crisis.

Systems of Intervention in Exchange Rates

Under the Bretton Woods System in 1944, countries globally followed the fixed exchange rate system linked to the US Dollar until the US government unilaterally suspended it in 1971. Since then, countries have moved to differently managed rate systems including the fixed rate systems. The managed float system is one variant of the managed system where the monetary authorities allow market exchange rates to fluctuate with a pre-announced corridor. The corridor is the space between the rate at which the authorities buy Dollars from the market and the selling rate at which the authorities sell Dollars to the market. As such, market exchange rates remain within the corridor as long as the authorities have an adequate Dollar reserve to defend the corridor.

Meantime developed countries have moved to free float system since 1990s by allowing market forces to determine the exchange rate. Therefore, central banks do not have any targets of exchange rates or intervention. However, they take into consideration movements of market exchange rates when making monetary policy decisions as exchange rates have a considerable impact on the inflation, growth and employment.

However, the free float branded bravely in some developing countries from time to time is a de facto managed float as respective central banks attempt to keep the exchange rate within a corridor or on a flat trend or around a level arbitrarily determined without any macroeconomic knowledge on the level of the exchange rate representative for the economy or the foreign currency market.

Sri Lankan system has undergone in different regimes. First, the fixed rate system in line with the IMF-Bretton Woods Agreement prevailed until November 1977. Second, the national budget in November 1977 terminated the fixed rate system and introduced a managed float system (or crawling peg) with a very narrow corridor. The Central Bank has followed it by gradually widening the corridor until 20 January 2001. Third, as the Central Bank started confronting a near currency crisis threatened by the depleting foreign reserve due to the speculative attack on the currency, partly spread from Asian Financial Crisis 1997/98, the exchange rate corridor was abandoned on 21 January 2001 and allowed to float freely in the market. This policy was supported by a policy package inclusive of an IMF programme to contain excessive speculation envisaged.

However, since 2008 the Central Bank has switched among fixed, managed float and free float arbitrarily decided at various times. The float announced on 7 April 2022 is the latest float implemented after the collapse of the foreign reserve. One prior instance is that the Finance Ministry who antagonized with the Central Bank for wasting of billions of Dollars out of the foreign reserve to keep the exchange rate arbitrarily fixed during 2010-11 depreciated the Rupee by 3% through the national budge presented to the Parliament on 24 November 2011 and instructed the Central Bank to adjust its monetary policy accordingly.

However, the Central Bank again has introduced another managed float under the term of Guidance Rate of Rs. 360 per US Dollar with a corridor of Rs. 2.60 for inter-bank spot transactions, despite the non-existence of a liquid foreign currency reserve to keep the corridor operating. This is same as the managed/fixed rate system of Rs. 198.50-202.99 corridor implemented by the Central Bank from September 2021 until the recent float. Therefore, the arbitrary mismanagement of the exchange rate in Sri Lanka is self-explanatory.

Recent Misconceptions in Sri Lanka

From early 2021, various comments have been made by economists, policymakers and political leaders on strategies and lapses in the management of Sri Lankan exchange rate. A review of these comments shows their misunderstanding on subject. A few of them are given below.

• First, in response to the latest float of the exchange rate on 7 March 2022, one Economics Professor commented that the float is a flawed policy as all countries including developed countries control their exchange rates within a corridor, i.e., managed float system. This is completely wrong as already briefed above. First, exchange rate in developed countries is freely determined in the market (free float) without any intervention by central banks. Second, there are countries which control the exchange rate at a fixed rate while some countries intervene to reduce the volatility with or without indicating a specific market exchange rate.

• Second, high-ranking officials of the Central Bank at a telecast discussion held on 12 January 2022 stated that the exchange rate was needed to keep fixed in order to control the cost of living and government’s foreign debt service burden. This is unacceptable due to three reasons. First, the Central Bank did not have enough Dollar reserve or sources of Dollar inflow to keep the exchange rate fixed. Second, such intervention had already failed in the past due to lack of Dollar inflows. Third, keeping the market exchange rate fixed by a regulation issued to banks without a supporting foreign currency supply/reserve is not sustainable or practical as the black market with freely determined exchange rates would crowd out the official foreign exchange market causing a currency crisis. This is what really caused the present currency crisis and bankruptcy in Sri Lanka.

• Third, the present Central Bank Governor introduced a guidance exchange rate to banks on 13 May 2022 requiring them to fix the inter-bank spot exchange rate at Rs. 360 with a margin of Rs. 2.60. This is simply a reintroduction of the fixed exchange rate at a different level to the float introduced on 7 March 2022. As the Central Bank does not have a foreign currency reserve, this is also a non-functional regulation which does not have any economics like the case of the exchange rate prior to 7 March 2022. Therefore, this guidance rate is an economic joke of the Central Bank who states that the exchange rate is now stable due to the new policy actions taken by the Central Bank and the government.

• Fourth, political leaders blame successive governments for the failure to protect the Rupee at the exchange rate of Rs. 5-6 that prevailed in two decades of 1950-1960 and for the open economic policy since 1977 for the fast depreciation of the currency. They state that the present exchange rate of around Rs. 365 is an increase of 7,668% from the exchange rate of Rs. 4.76 in 1950. Therefore, they do not understand how the world has evolved with different exchange rate mechanisms and markets that countries had to follow akin to international systems.  For example, world exchange rates in 1950-60 decades followed the IMF-Bretton Woods system which was terminated in 1971. The present exchange rate system is largely the floating system if the IMF financial aid is sought. Therefore, the blame for the open economic policy in 1977 is also baseless. Further, their numerical comparison of exchange rates among the countries to state that a particular currency is stronger than another currency has no economic basis. It is surprised why they think of a fixed world of markets for 72 years. Therefore, politicisation of the exchange rate subject is detrimental to the economy and general public.

Final Remarks

There is no controversy that the present economic crisis and bankruptcy confronted by the general public in Sri Lanka are a result of a currency crisis akin to mismanagement of the exchange rate in contravention of the provisions of Monetary Law Act and Foreign Exchange Act as well as economic principles. However, the present Central Bank Governor has recently expressed that present policies are effective to overcome the crisis and would stabilize the economy next year.

However, the analysis given above shows that the present policies implemented to source foreign reserve and to control the exchange rate are nothing but same mistakes committed by the Central Bank in the past two decades. It is noted that it is the present Governor who implemented and supervised the exchange rate intervention systems along with the monetary policy for about 15 years until the end of 2020. 

In fact, daily determination of the exchange rate and intervention were determined by the then Deputy Governor (who is the present Governor) who supervised the price stability cluster, i.e., monetary policy and foreign exchange policy. Therefore, the present Governor should be held responsible for the immediate cause of the present economic crisis as well as for the continued delay in the recovery from the crisis.

Given the catastrophic impact of the crisis on the living standards over generations, the mismanagement of the monetary and exchange policies as highlighted above is no doubt a serious economic crime committed by the relevant officials led by the present Governor in the Central Bank. In this regard, a lower court judgement ordering the Governor of Central Bank of Thailand to reimburse the loss of US$ 4.6 bn to the foreign currency used to defend the currency/exchange rate during 1997/98 Asian Financial Crisis without a valid economic rationale is a case in point.

Further, if a business company had gone bankrupt due to this kind of pricing and financial mismanagement, the board of directors and finance managers would have been prosecuted for financial fraud in courts.

Accordingly, only the Minister of Finance has the ultimate statutory mandate under the Monetary Law Act and Foreign Exchange Act to intervene in monetary and exchange policies of the Central Bank if the government wishes to correct the country’s economic conditions for saving and preserving living standards. Otherwise, the public has no option but to suffer in the crisis or find solutions in personal ways.

 (This article is released in the interest of participating in the professional dialogue to find out solutions to present economic crisis confronted by the general public consequent to the global Corona pandemic, subsequent economic disruptions and shocks both local and global and policy failures.)

 

P Samarasiri

Former Deputy Governor, Central Bank of Sri Lanka

(Former Director of Bank Supervision, Assistant Governor, Secretary to the Monetary Board and Compliance Officer of the Central Bank, Former Chairman of the Sri Lanka Accounting and Auditing Standards Board and Credit Information Bureau, Former Chairman and Vice Chairman of the Institute of Bankers of Sri Lanka, Former Member of the Securities and Exchange Commission and Insurance Regulatory Commission and the Author of 10 Economics and Banking Books and a large number of articles published)