Central Bank Independence Vital for Stability and Recovery – Governor Weerasinghe
- CNL Reporter
- August 30, 2025
- Banking and Financial, News
- Central Bank I
- 0 Comments
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Central Bank Governor Dr. Nandalal Weerasinghe, delivering the 75th Anniversary oration of the Central Bank of Sri Lanka (CBSL), stressed that preserving the Bank’s independence is essential to safeguarding stability, ensuring recovery, and securing long-term prosperity.
He noted that before the Central Bank Act (CBA), successive governments relied on borrowing directly from the CBSL to cover deficits, fuelling inflation and undermining monetary policy. “Such practices no longer occur under the CBA,” he said, highlighting the law’s role in anchoring price stability.
The Governor emphasised that independence does not mean isolation. The CBSL continues structured coordination with the Finance Ministry while maintaining autonomy in its decision-making. Accountability provisions now require the Bank to explain to Parliament whenever inflation targets are missed, strengthening transparency and public trust.
Dr. Weerasinghe also highlighted new powers under the CBA, including the CBSL’s designation as the country’s Macroprudential Authority, enabling it to identify systemic risks and protect the financial system. Recent reforms, such as the 2023 and 2024 Banking Acts, have further strengthened governance, investor confidence, and depositor protection.
Addressing myths, he rejected claims that the CBSL is “beyond sovereignty,” stressing that it is accountable to Parliament and ultimately to the people. He also clarified that the Bank does not fix the rupee, but only intervenes to smooth volatility.
Concluding, Dr. Weerasinghe warned that weakening independence would jeopardise stability. “Independence is not a privilege but a responsibility,” he said.
