Sri Lanka continues to maintain a strong financial stability and a positive economic growth, despite the global economic meltdown, due to an efficient and resilient banking system in the island, according to P.D.J. Fernando, Deputy Governor Central Bank,
Speaking at the inauguration of the 4th International Training Programme on Banking Supervision and Regulations at the Centre for Banking Studies, in Rajagiriya this week, Mr. Fernando said that banks can create vulnerabilities of systematic nature, partly due to a mismatch in maturity of assets and liabilities.
In these circumstances, the soundness of banks is vital, as it contributes towards maintaining confidence in the financial system and any failure may have the potential to impact on activities of all financial and non financial entities he added.
Citing an example he disclosed that the timely intervention of the government and the Central Bank had prevented a possible collapse of a private bank (Seylan Bank) due to the down fall of its parent company owing to financial mismanagement in the recent past and this bank came through the difficulty in an extra ordinary manner, and it has prevented the run on deposits in other local banks, as well, he said.
The programme is part of a series organized by the Centre for Banking Studies of the Central Bank for 20 officers of the Bangladesh Bank.
Mr Fernando said banks play a central role within the financial system, as they have the capacity to provide liquidity to the entire economy.
Banks are also responsible for providing payment services and facilitating economic agents to carry out their financial transactions.
Therefore he said that further learning on the regulatory and supervisory aspects of banks based on the internationally accepted standards and sharing cross country experience in banking supervision is of paramount importance. |
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