Why Central Bank Independence Matters – in Crisis, in Recovery, and Beyond

I am deeply honoured to be delivering this oration on the occasion of the 75th Anniversary of the Central Bank of Sri Lanka (CBSL). As the Governor of this great national institution, I accepted the task of delivering this oration on central bank independence at this landmark moment with a deep sense of responsibility, knowing that the work of central bankers is never complete. The lessons the country, its people, the Central Bank, its staff and leadership have learnt over this long history must be recorded and shared, enabling future generations to build on and contribute to the prosperity of the people of Sri Lanka better.

Before I begin, I would like to take this opportunity to extend my heartfelt thanks to all well-wishers and stakeholders - especially the dedicated staff - for their invaluable contributions towards achieving the objectives of the Central Bank over the past 75 years. In particular, I wish to express my deep gratitude to the members of the Central Bank Boards and the staff for their exceptional commitment over the past three years. Their tireless efforts played a pivotal role in stabilising the economy and laying the foundation for a swift and sustainable recovery from the most profound socioeconomic crisis Sri Lanka has faced since independence.

Seven and a half decades ago, in 1950, our nation took a momentous step towards economic sovereignty with the establishment of the Central Bank of Ceylon. This was a decision that our founder Governor John Exter noted as demonstrating our “intention to achieve genuine economic freedom as a corollary of the political freedom” that Sri Lanka had gained just 2 years earlier. Looking back, we see that the journey of the CBSL has been one of continuous learning and evolution to enable such freedom through “the fuller use of the nation’s human and material resources and a rising standard of comfort for all” as described by Exter.

Today, we will reflect on how the CBSL has evolved over last 75 years and the need to protect gains in terms of independence and accountability. While addressing some common myths and criticism, I will also examine the challenges that central bank independence faces amid evolving domestic and global pressures. Accordingly, over the next hour, I expect to carefully build my case on why and how every Sri Lankan must preserve the Central Bank’s independence and its accountability to protect the bedrock of stability for our nation to thrive in the period ahead.