Central Bank of Sri Lanka

The Central Bank of Sri Lanka (CBSL) is the country’s monetary authority and central bank. It was established in 1950 under the Monetary Law Act No. 58 of 1949, two years after Sri Lanka became independent. The institution replaced the Board of Commissioners of Currency of Ceylon, which had previously overseen the issue and management of the country’s currency. It initially operated as the Central Bank of Ceylon and adopted its present name in 1985. John Exter served as its founding governor, while J. R. Jayewardene was the finance minister involved in the institution’s creation. The CBSL’s central responsibilities are maintaining domestic price stability and preserving the stability of the financial system. It conducts monetary policy, manages the issue and circulation of Sri Lankan currency, monitors monetary and macroeconomic conditions, and regulates and supervises banking institutions. Its work affects interest rates, liquidity, credit conditions, exchange-market administration, and the resilience of financial institutions operating in Sri Lanka. The bank also collects and publishes economic and financial information and conducts research for monetary-policy decision-making and public understanding. In addition to its monetary and supervisory functions, the CBSL acts as banker and economic adviser to the Government of Sri Lanka. On behalf of the government, it performs agency functions that include managing the Employees’ Provident Fund, administering public debt, administering provisions of the Exchange Control Act, and managing certain foreign-funded and government-funded credit schemes for regional development. The bank is also associated with international and regional financial cooperation, including membership in the Asian Clearing Union. Financial inclusion is another area of institutional activity. The CBSL develops policies intended to widen access to formal financial services and participates in the Alliance for Financial Inclusion. Its remit therefore extends beyond traditional interest-rate policy to questions involving payment access, credit availability, consumer-facing financial infrastructure, and the soundness of the financial system. The institution underwent a significant legal and governance change in 2023. Following the political and economic crisis that culminated in the 2022 Aragalaya protests, Sri Lanka enacted the Central Bank of Sri Lanka Act No. 16 of 2023. The new law replaced the Monetary Law Act framework and provided the CBSL with greater administrative and financial autonomy. Under the new framework, the bank operates as a body corporate with perpetual succession and a common seal. Its principal decision-making bodies are the Governing Board and the Monetary Policy Board. The Governor serves as chief executive and chairs both boards, while appointed members and senior central-bank officials contribute to governance and policy decisions. The CBSL remains an active public institution serving the Sri Lankan economy. Its responsibilities combine monetary management, bank supervision, currency issuance, public-sector financial agency work, economic research, and financial-inclusion policy. During periods of severe economic or natural disruption, the bank may also issue supervisory directions intended to protect borrowers and maintain financial-system continuity, as illustrated by measures reported after Cyclone Ditwah in 2025.

The Central Bank of Sri Lanka was created in 1950, shortly after the country gained independence. Its legal foundation was the Monetary Law Act No. 58 of 1949, which provided for a modern central-bank institution in place of the colonial-era Board of Commissioners of Currency of Ceylon. The currency board had been responsible primarily for issuing and managing currency, whereas the new central bank was designed to undertake a broader set of monetary, banking, and economic functions. John Exter became the first governor, and J. R. Jayewardene was the finance minister associated with the institution’s establishment. The bank initially operated under the name Central Bank of Ceylon. Its responsibilities included issuing the national currency, conducting monetary policy, advising the government on economic matters, acting as the government’s banker, and supervising banking institutions. The Economic Research Department and Bank Supervision Department were established as statutory or institutionally important functions. Economic research supported the Monetary Board and public dissemination of information, while bank supervision provided continuing oversight of banking institutions in Sri Lanka. Over time, the CBSL’s mandate developed beyond currency issuance and conventional monetary management. It became an agent of the Sri Lankan government for public-debt administration and for management of the Employees’ Provident Fund. It also administered provisions relating to exchange control and participated in government- and foreign-funded credit programs aimed at regional development. These agency functions positioned the bank as an important operational link between the state, domestic financial institutions, and international financial flows. The institution has also participated in regional and international financial cooperation. It is a member of the Asian Clearing Union and has pursued financial-inclusion policies through participation in the Alliance for Financial Inclusion. Such activity reflects the widening role of central banks in payment access, financial infrastructure, consumer inclusion, and the resilience of the broader financial system. The CBSL’s modern history has been shaped by Sri Lanka’s recurring macroeconomic and political pressures. Its conventional responsibilities—price stability, monetary policy, currency administration, and banking supervision—have operated alongside the practical demands of managing financial stress and maintaining confidence in the banking system. The political upheaval known as the Aragalaya in 2022 formed part of the context for later institutional reform. In September 2023, Sri Lanka enacted the Central Bank of Sri Lanka Act No. 16 of 2023. This legislation replaced the previous Monetary Law Act framework and granted the bank significantly greater administrative and financial autonomy. It also formalized the CBSL as a body corporate with perpetual succession and a common seal. Under the new structure, the Governing Board and Monetary Policy Board are the principal governance bodies, with the Governor serving as chief executive and chairing both boards. The reform sought to clarify the institutional basis for monetary-policy decision-making and strengthen the separation between central-bank functions and broader government financing pressures. The CBSL continues to operate as Sri Lanka’s central monetary and financial authority. Its present structure includes the Governor, Deputy Governors, Assistant Governors, and departmental leadership across functions such as economic research, bank supervision, financial-system oversight, currency management, and government agency services. Its role during emergencies also remains relevant. Following Cyclone Ditwah in 2025, the bank directed licensed banks to offer repayment moratoria, waive penalty charges, and consider restructuring or new credit for affected borrowers, while requiring reporting to support supervisory monitoring. This illustrates the continuing combination of monetary authority, financial regulation, and crisis-response responsibilities in the institution’s work.

• 2025

  Cyclone Ditwah borrower-relief directive

  [1]Central Bank of Sri Lankaen.wikipedia.org

  The CBSL directed licensed banks to provide temporary repayment moratoria, waive penalties, consider restructuring or new credit, and report relief implementation.

• 2023

  Central Bank of Sri Lanka Act introduces a new framework

  [1]Central Bank of Sri Lankaen.wikipedia.org

  Act No. 16 of 2023 replaced the Monetary Law Act framework, gave the CBSL greater autonomy, and established the Governing Board and Monetary Policy Board.

• 1985

  Institution adopts the name Central Bank of Sri Lanka

  [1]Central Bank of Sri Lankaen.wikipedia.org

  The bank, previously known as the Central Bank of Ceylon, became known as the Central Bank of Sri Lanka.

• 1950

  Central Bank of Ceylon begins operations

  [1]Central Bank of Sri Lankaen.wikipedia.org

  The institution was established two years after independence, succeeding the Board of Commissioners of Currency of Ceylon. John Exter became its founding governor.

• 1949

  Monetary Law Act establishes the legal basis for a central bank

  [1]Central Bank of Sri Lankaen.wikipedia.org

  Monetary Law Act No. 58 of 1949 provided the statutory foundation for replacing the currency-board system with a central bank.

Sri Lanka’s independent monetary authority and principal regulator of the banking and financial system.

• Central-bank policy · 1950

  Monetary policy

  The CBSL formulates and implements monetary policy with the objective of securing price stability. Its policy work involves assessing economic conditions, producing research and data, and using the instruments available to influence monetary and financial conditions in Sri Lanka.

• Currency services · 1950

  Sri Lankan rupee currency management

  The bank is responsible for issuing and managing Sri Lanka’s currency. This includes the institutional functions associated with maintaining the country’s monetary circulation and supporting confidence in the national currency.

• Financial regulation · 1950

  Banking supervision

  Through its supervisory functions, the CBSL continuously regulates and supervises banking institutions in Sri Lanka. The work is intended to support the safety, soundness, and stability of the banking system.

• Public-sector financial agency · 1950

  Government banking and public-debt services

  The CBSL acts as banker and economic adviser to the Government of Sri Lanka. As a government agent, it manages public debt and performs additional agency functions connected with the Employees’ Provident Fund, exchange-control administration, and designated credit schemes.

• Financial development

  Financial-inclusion policy

  The bank develops policies intended to broaden access to financial services and participates in the Alliance for Financial Inclusion. This work complements its monetary and supervisory responsibilities by addressing access to formal finance.

• 2025

  Cyclone Ditwah financial-relief measuresOther

  Background

  Borrowers affected by Cyclone Ditwah faced financial disruption and potential difficulty meeting scheduled loan repayments.

  Action taken

  The CBSL directed licensed banks to provide temporary repayment moratoria, waive penalty charges, consider loan restructuring or new credit facilities, and submit monthly implementation reports.

  Aftermath

  The measures were intended to reduce immediate borrower stress while allowing the central bank to monitor relief delivery and preserve financial-system stability.

  Source

• 2023

  Adoption of the Central Bank of Sri Lanka ActStrategy

  Background

  Sri Lanka’s political and economic crisis, including the 2022 Aragalaya upheaval, preceded a legislative restructuring of the central bank’s legal basis.

  Action taken

  Sri Lanka enacted Act No. 16 of 2023, replacing the Monetary Law Act framework and providing the CBSL with greater administrative and financial autonomy.

  Aftermath

  The bank became a body corporate with perpetual succession and a common seal, operating through a Governing Board and a Monetary Policy Board.

  Source

• 2025

  CBSL directs banks to provide relief after Cyclone Ditwah[1]Central Bank of Sri Lankaen.wikipedia.org

  Regulation · Other

  After Cyclone Ditwah, the CBSL directed licensed banks to provide temporary loan-repayment moratoria, waive penalty charges, and consider restructuring or new credit for affected borrowers. Banks were also instructed to report relief measures monthly so implementation could be monitored.

• 2023

  Sri Lanka enacts a new Central Bank Act[1]Central Bank of Sri Lankaen.wikipedia.org

  Regulation

  Sri Lanka replaced the Monetary Law Act framework with the Central Bank of Sri Lanka Act No. 16 of 2023. The new law strengthened the bank’s administrative and financial autonomy and established the Governing Board and Monetary Policy Board as core governance bodies.

1. 1Central Bank of Sri Lankaen.wikipedia.org
2. 2DFCC Bank wins Top Employer award at CIMA annual conferencelankabusinessonline.com