Economy Forward

  Article's Background The CB has released its inaugural reports as required in sections 80 and 99 of the Act on 25 April 2024 as follows. Annual Economic Review 2023 - in terms of section 80 Financial Statements and Operations of the Central Bank 2023 -  in terms of section 99 This is in contrast to the requirement of the annual report of the Monetary Board under the Monetary Law Act that governed the Monetary Board/CB up to 14 September 2023 since its inception in 1950. By looking at two new reports, I wonder whether this is the independence consciously given by lawmakers to the Governing Board/CB to operate even  without   a standard annual report. The annual report is a requirement in good corporate governance of institutions whether private or public or business or non-business, irrespective of their incorporation. The annual report is an official means to the general public to know the objectives, business operations, management system, business performance, fi...

  Article's Background I happened to read an article titled " Jeremy Hunt urged to review Bank of England’s independence" published in an international website " The Telegraph" on 20 April 2024  (read the article here) . This article is about a written request of 40 senior Conservative Party lawmakers demanding the UK Chancellor of Exchequer (Finance Minister) for a review of the monetary policy independence of the Bank of England (BOE). The request has given several reasons why the present BOE is not in the interest of the general public. During the past few decades, almost all country governments have followed the BOE model of central bank monetary policy independence. This independence means that the central bank has the freedom to use its policy instruments to control the inflation at low levels, irrespective of the rest of the economy and government policies. Sri Lanka is the latest (14 September 2023) to this independence list which has already created en...

Article's Background The Central Bank (CB) released a 12-paged pamphlet on "Macroprudential Policy Framework" on 14 March 2024 (see the press release) (see Pamphlet) . According to its contents, the pamphlet spells out the policy framework that will be used to secure the CB's statutory object of financial system stability as set out in the section 6 of the Central Bank of Sri Lanka Act, No. 16 of 2023. Therefore, the framework is to comply with the macroprudential authority in Sri Lanka vested with the CB as stipulated in the Part X of the Central Bank Act which provides for relevant macroprudential objectives, powers and instruments. Both legal provisions and pamphlet seem attempting to articulate that this macroprudential framework is like a rocket science to ensure the achievement and maintenance of the financial system stability in the country. Therefore, this short article is released to show that  relevant macroprudential professionals of the CB have no idea of ...