CBSL Governor calls for out of the box thinking | Daily News


 

CBSL Governor calls for out of the box thinking

Central Bank Governor Professor W D Lakshman said that out of the box thinking was required if Sri Lanka was to achieve a high rate of growth. Prof Lakshman was speaking on a webinar released on June 22.

Prof Lakshman said that the COVID-19 crisis was not a normal situation. He said that to save the livelihoods of the common man and to protect the economy there was a call for out of the box thinking by the Central Bank. He said that people concerned with the Central Bank all agreed that drastic actions by the bank were required and that the only disagreement was on the chosen course of action.

Prof Lakshman said that recent events linked to a lending institution were for an organization that was not registered with the Central Bank. He highlighted the newly formed committee that will look into the conduct of lending institutions.

Prof Lakshman said that the statutory reserve ratios which had already been brought down earlier in his tenure had now been reduced by 300 basis points from 5 percent to 2 percent. This will release Rs 115 billion additional liquidity into the banking system. Prof Lakshman noted that the banking sector was in full control of how to disburse the released cash from reserves.

He said that from 2015-2019 the Central Bank was dealing with the fallout caused by irregularities surrounding the government bond issuance.

Prof Lakshman highlighted the firm decisions taken by the newly appointed President and the relief granted through fiscal measures to the broader population. He said that during February of this year he had publicly stated that Sri Lanka was ready for an economic take-off in terms of growth but the COVID crisis struck in March.

The governor said that the Central Bank should look to create stable growth and to prevent asset bubbles from forming. He said that the Central Bank exists to maintain price stability and to regulate the banking sector. Prof Laksman said that Sri Lanka unlike other countries with economic success stories was yet to have a 10 year period with high sustained economic growth in excess of 8 percent.

He said that the President’s recent statements were directed at the Monetary Board and not the Central Bank as the Central Bank did not have the power to take the decisions discussed.


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