Question:
The new Central Bank Act of 2023 has debarred the Central Bank of Sri Lanka from
(1) printing money.
(2) granting direct or indirect credit to the government.
(3) playing the role as the banker to the government.
(4) conducting its open market operations as a monetary policy instrument.
(5) intervening to the foreign exchange market.
Correct Answer:
(2)
Answer Explanation:
A defining reform of the Central Bank of Sri Lanka Act, No. 16 of 2023 was the explicit prohibition of “monetary financing” (printing money to cover government budget deficits). Specifically, Section 104 strictly debars the CBSL from granting direct or indirect credit to the Government, ensuring the Central Bank’s absolute independence.
Topic: Central Banking Year: 2024
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