The Central Bank (CB) has introduced a series of measures aimed at stabilising the country’s financial system and preventing the collapse of the banking network during the ongoing economic crisis. Central Bank Governor Nandalal Weerasinghe highlighted the significance of the new Central Bank Act and recently introduced banking regulations, noting that these legal frameworks are [...]

Business Times

Central Bank’s measures to stabilise financial system: CB Governor

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The Central Bank (CB) has introduced a series of measures aimed at stabilising the country’s financial system and preventing the collapse of the banking network during the ongoing economic crisis.

Central Bank Governor Nandalal Weerasinghe highlighted the significance of the new Central Bank Act and recently introduced banking regulations, noting that these legal frameworks are beneficial for the entire financial sector.

One key action taken to stabilise the financial system was the formation of a financial system monitoring committee, established under the new Central Bank Act.

This committee has been instrumental in ensuring the stability of not just the banking system, but also the non-banking financial institutions, the stock market, and the insurance sector, according to Governor Weerasinghe.

These comments were made during a special meeting held on Tuesday, September 3, where Governor Weerasinghe addressed Members of Parliament to update them on the Central Bank’s activities.

The meeting, chaired by Speaker Mahinda Yapa Abeywardana, was part of the statutory requirement for the Parliament to review the Central Bank’s operations every four months, as outlined in the Central Bank of Sri Lanka Act, No. 16 of 2023.

Governor Weerasinghe also mentioned that the strengthened regulatory framework for licensed banks would enable them to access foreign funding sources more easily and expand their global presence.

The Banking (Amendment) Bill, which was passed by Parliament on April 2, 2024, and came into effect on June 15, 2024, plays a crucial role in this regard.

According to Central Bank data, the banking sector, which represents approximately 61.5 per cent of the total assets of the financial sector, is rapidly evolving and becoming increasingly complex.

 

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