Sri Lanka: Monetary Law Act

This paper presents the amendments made to chapter 422 of the Monetary Law Act of Sri Lanka.

The paper discusses the:

• Establishment of the monetary unit the Rupee;
• Establishment of the Central Bank to administer and regulate the monetary system, detailing the:
  • Power and purposes of the Central Bank;
  • Constitution and powers of the Monetary Board;
  • Function and duties of the Governor and the Deputy Governor;
  • Different departments of the Central Bank;
  • Reports and publications;
  • Computation of profits and losses;
  • Audit;
  • Restrictions relating to Central Bank officers and servants.
• Central Bank and the means of payment - discussing the definition and use of currency, demand deposits and money supply;
• Relationship between the Central bank and the National Monetary Policy and domestic and international monetary stabilization;
• Instruments of Central Bank action, including:
  • Operations in gold and foreign exchange;
  • The regulations of foreign exchange operations of commercial banks;
  • Credit operations with banking institutions, credit institutions and the Government;
  • Open market operations;
  • Regulation of the reserves of commercial banks.
• Means by which the Central Bank purchases shares in certain companies;
• Role of the Central bank as fiscal agent, banker and financial advisor of the Government;
• Transitional provisions of the law.