central bank of srilanka

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Central bank of Russia and Central bank of Srilanka

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Central banking

CENTRAL BANK OF SRILANKA

Our Vision

Our vision clearly indicates that the Bank is deeply committed to contributing to the prosperity of Sri Lanka

The term prosperity has a wide connotation: enhancement of the quality of life of people through

sustainable wealth creation and inclusion of all segments of the society in enjoying the benefits of

development.

The Central Bank would facilitate this process by ensuring economic and price stability and financia

system stability while providing prudential andpro-active policy recommendations, as the Advisor to theGovernment on Economic Affairs. In doing so, the Bank would act with the highest degree of integrity and

professionalism, earning respect for its objectivity and apolitical stance.

Our Values

Commitment to inspirational leadership -

Providing strategic leadership to the financial sector.

Transparency in what we do-

Being ready to explain the rationale behind our actions.

Accountability to our key stakeholders the public, government, financial institutions and employees -

Taking responsibility for our policy advice and actions.

Integrity (trust,dependability,honesty) -Matching words with deeds by discharging functions ethically in the best interests of our stakeholders

Commitment to professional competence -

Dedication, quality and excellence in all us do.

Commitment to lifelong learning, knowledge sharing and innovation -

Acquiring the required skills individually and collectively in a rapidly changing world.

Consistency, accuracy and timeliness of all actions taken by the Bank-

Earning respect for what we do.

Managing and ensuring operational autonomy for policy formulation and

implementation -

Providing the organizational freedom for objective decisions.


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Central banking

Introduction:

Established in 1950 under the Monetary Law Act No.58 of 1949 (MLA), the Central Bank of Sri Lanka

(CBSL) is the apex institution in the financial sector in Sri Lanka. It is a semi-autonomous body and,

following the amendments to the MLA in December 2002, is governed by a five member Monetary

Board, comprising the Governor of the CBSL as Chairman, the Secretary to the Ministry of Finance and

Planning and three members appointed by the President of Sri Lanka, on the recommendation of the

Minister of Finance, with the concurrence of the Constitutional Council.

With a view to encouraging and promoting the development of the productive resources of Sri Lanka,

the CBSL is responsible for securing its core objectives of economic and price stability and financial

system stability. The CBSL is also responsible for currency issue and management. In addition, the CBSL

is the advisor on economic affairs as well as the banker to the Government of Sri Lanka (GOSL). On

behalf of GOSL, the CBSL, as its agent, is responsible for four agency functions of:

Management of the Employees Provident Fund

Management of the public debt of Sri Lanka

Administration of the provisions of the Exchange Control Act

Administration of foreign and government funded credit schemes for regional development

The Governor of the CBSL functions as its Chief Executive Officer. The Governor, Deputy Governors and

several Assistant Governors, along with the Heads of Departments, form the senior management of

the CBSL. Functionally, the CBSL presently consists of 27 Departments , each headed by a Director (orequivalent), reporting to the Governor or the Deputy Governor through an Assistant Governor, with

the exception of the Internal Audit Department, which reports directly to the Governor. The Economic

Research and Bank Supervision Departments were explicitly set up under the original legislation

establishing the CBSL, with certain statutory functions. The Economic Research Department is required

to compile data and conduct economic research for the guidance of the Monetary Board and for the

information of the public, while the Bank Supervision Department is required to engage in the

continuous regulation and supervision of all banking institutions in Sri Lanka.


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Central banking

Objectives & Functions

The Central Bank's focus and functions have evolved since its formation, in response to the

changing economic environment. In keeping with trends in central banking, the objectives of

the Central Bank were streamlined by amending the Monetary Law Act (MLA) in 2002, to

enable it to pursue its core objectives and to free it of the multiple objectives that wereoriginally assigned to it. The Central Bank has two core objectives:

Maintaining economic and price stability

Maintaining financial system stability

Prior to the amendment of the law, the Central Bank had multiple objectives, which could

sometimes be in conflict or be inconsistent with each other.

Meanwhile, a consensus had developed internationally that a central bank's primary goal

should be the maintenance of price stability. As price stability is crucially dependent on stable

macroeconomic conditions, one of the core objectives of the CBSL was therefore specified as

"economic and price stability". Furthermore, as the experience of other countries has

demonstrated, the stability of the financial system is crucial in improving the resilience of the

economy. Hence, financial system stability was also identified as a core objective of the CBSL.

The two objectives are correlated and complement each other. Ensuring financial system

stability is of prime importance, as monetary policy is transmitted through financial

intermediaries (institutions) to achieve price stability. Hence, the two objectives are in

harmony and this enables the Central Bank to perform its main functions more effectively. The

CBSL has been given a high degree of autonomy to achieve its objectives. In this task, the Bank

closely liaises with the Ministry of Finance in making policy decisions and the Secretary to the

Ministry of Finance is a member of the Monetary Board, which is the governing body of the

CBSL.

Economic and Price Stability

Price stability safeguards the value of the currency in terms of what it will purchase at home

and in terms of other currencies. Price stability or stable prices means low inflation. Experience

has shown that the economy performs well when inflation is low and is expected to be low.

Interest rates are also low in these conditions. Such an environment allows an economy to

achieve its growth potential and fosters high employment. Free from the disruptive effects of

high and variable inflation, both consumers and producers make economic decisions with

confidence. Low inflation or price stability fosters sustainable long-term economic growth and


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Central banking

Agency Functions:

The Central Bank of Sri Lanka undertakes the following four agency functions for the Government of Sri

Lanka.

Foreign Exchange Management

The foreign exchange management function in Sri Lanka

is exercised on behalf of the Government by the Central

Bank of Sri Lanka, through the Exchange Control

Department (ECD) established under the Exchange

Control Act No. 24 of 1953.

Public Debt Management

In terms of Section 113 of the Monetary Law Act, the

public debt management function is entrusted to the

Central Bank of Sri Lanka (CBSL). Accordingly, the CBSL

acts as an agent of the Government particularly in

handling domestic debt management, while several

other government institutions deal with foreign debt

management-activities.

Regional Development

The Central Bank of Sri Lanka acts as the apex agency for various donor assisted regional development

and micro finance programmes to ensure credit delivery to the lower and middle income groups in the

country, by providing refinance and credit guarantees to lending banks and financial institutions for on-

lending to micro, small and medium enterprises ( MSMEs ).

Employees' Provident Fund (EPF)

The Employees' Provident Fund (EPF) was established under EPF Act No. 15 of 1958 where the

Monetary Board as the custodian of the Fund is vested with the responsibility of receivingcontributions from employers, investing excess funds, maintaining proper accounts and paying benefits

to members
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Central banking

Financial System Stability

One of the core objectives of the Central Bank is to maintain financial system stability. The Central

Bank discharges this role by establishing the required legal framework, regulating and supervising key

categories of financial institutions, maintaining stability in key financial markets, overseeing the

payments and settlements system, acting as lender of last resort and by regular surveillance of the

entire financial system, including insurance and stock market activities

Regulation and Supervision:

Regulation and Supervision of Banks

Regulation and Supervision of Finance Companies

Regulation and Monitoring of Finance Leasing Establishments

Regulation and Supervision of Primary Dealers

Monitoring and Surveillance:

Maintaining Stability in Money and Foreign Exchange Markets

Overseeing the Payment and Settlement System

Surveillance of Financial Conglomerates

Lender of Last Resort

Laws & Regulations:

The Central Bank of Sri Lanka was established in 1950 under the Monetary Law Act No 58 of 1949 and

is the apex institution in the financial sector. Since inception, the Central Bank has been responsible for

regulating the financial system of the country. Several key legislative enactments provide powers to

the Central Bank to carry out its functions to achieve its primary objectives of economic and price

stability and financial system stability. Under these powers, the Central Bank issues directions for the

establishment and operations of all categories of financial institutions under its supervisory and

regulatory purview. In addition, the Central Bank has been empowered to carry out certain agency

functions under other legislative enactments.

Legislative Enactments

The financial system of the country is regulated by several legislative enactments. The key Acts

relevant to the regulatory role of the Central Bank are the Monetary Law Act, the Local Treasury Bills

Ordinance, Registered Stocks and Securities Ordinance, Exchange Control Act, Banking Act, Finance
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Central banking

Business Act, Finance Leasing Act, Payment and Settlement Systems Act and Financial Transactions

Reporting-Act.

Regulations, Directions, Rules, Guidelines, Circulars and Operating Instructions

Some departments of the Central Bank have been empowered to carry out functions directly bystatute, while other departments carry out functions and duties imposed by statute on the Central

Bank itself. Accordingly, powers are vested with those departments to issue regulations through the

Minister and directions, guidelines, circulars and operating instructions from time to time to achieve its

objective of financial system stability.

Licensing, Registration, Appointment and Authorisation Procedures

Requirements and procedures to be followed by a person to establish a local bank, foreign bank

branch, a finance co8mpany, a finance leasing company, a primary dealership, a dealership in foreign

currency and as a money changer have been issued by the Central Bank from time to time.
http://www.cbsl.gov.lk/htm/english/09_lr/l_2.htmlhttp://www.cbsl.gov.lk/htm/english/09_lr/l_2.htmlhttp://www.lanka.net/CBSL3/laws_reg/reg_dir_rub.php?pg=dihttp://www.lanka.net/CBSL3/laws_reg/reg_dir_rub.php?pg=dihttp://www.cbsl.gov.lk/htm/english/09_lr/l_3.htmlhttp://www.cbsl.gov.lk/htm/english/09_lr/l_3.htmlhttp://www.cbsl.gov.lk/htm/english/09_lr/l_3.htmlhttp://www.lanka.net/CBSL3/laws_reg/reg_dir_rub.php?pg=dihttp://www.lanka.net/CBSL3/laws_reg/reg_dir_rub.php?pg=dihttp://www.cbsl.gov.lk/htm/english/09_lr/l_2.html


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Central banking

CENTRAL BANK OF RUSSIA

Central Bank of Russia

Tsentral' nyj bank Rossi jskoj Federatsi i

Central Bank of Russia logo Headquarters

Headquarters Neglinnaya 12,Moscow,Russia

Established 1860 (historic), 1990 (modern)

Chairman Elvira Nabiullina

Central bank of The Russian Federation

Currency Russian ruble

ISO 4217 Code RUB

Reserves $521bn in totalStat[show]

Bank rate 8.25%
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Central banking

Introduction

TheCentral Bank of Russiais thecentral bank of the Russian Federation. The bank was founded in July of 1990,

and was declared a legal financial entity later that year. The headquarters of the bank are in Moscow, Russia.

The Central Bank of Russia is independent from the federal and local governments. The State Duma chooses the

Chairman of the Bank of Russia, and the bank is accountable to the State Duma as well.

The Central Bank of Russia has several responsibilities in compliance with the Russian Constitution and Federal

Law. The bank is the sole issuer of the Russian currency the ruble, and is also responsible for maintaining the

value and the stability of thecurrency and for the currency circulation. The Bank of Russia is also responsible

for planning and implementing the countrys monetary policy, working along with the Russian Government.

Another important duty of the bank is to oversee the Russian financial institutions and to issue/suspend banking

licenses. The bank also designs the banking industry rules (how to carry out banking operations, payment

settlement rules, etc.)

The Central Bank of Russia acts as a lender of last resort for Russian financial institutions, ensuring they have

enough liquidity in times of financial crisis. The bank also manages the Russian foreign reserves and is

responsible for foreign exchange regulation. The Central Bank of Russia also produces various analyses, reports

and projections about the Russian economy, and its interrelation with the countrys monetary policy.

The Central Bank of Russia acting on behalf of the Ministry of Finance, helped establish the Russian Government

Securities Market. The bank sets the short-term interest rates in Russia, which is one of the main instruments in

implementing itsmonetary policy.

Bank Of Russia Deposit Operations:

Under Article 4 and Article 46 of the Federal Law on

the Central Bank of the Russian Federation (Bank of

Russia), the Bank of Russia conducts operations to take

deposits from credit institutions for the purpose of

regulating banking sector liquidity. Deposit operations

are conducted in compliance withBank of Russia

Regulation No. 203-P, dated November 5, 2002, "On the

Procedure for Conducting Deposit Operations by the

Central Bank of the Russian Federation with Credit

Institutions in the Currency of the Russian Federation"

(with amendments).

At present the Bank of Russia conducts the following

deposit operations with resident credit institutions in

the national currency: deposit operations at fixed

interest rates and deposit operations at auction rates
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(deposit auctions)Deposit operations atfixed interest rates are conducted daily on standard conditions

(established by paragraph 4.3 ofBank of Russia Regulation No. 203-P, dated November 5, 2002, "On

the Procedure for Conducting Deposit Operations by the Central Bank of the Russian Federation with

Credit Institutions in the Currency of the Russian Federation" (with amendments). Deposit auctions

are held weekly on Thursday on the conditions set by the Bank of Russia (in accordance with the

quarterly schedule of deposit auctions). Deposit auctions are held according to the American auction

principle, when a credit institution may make both competitive and non-competitive bids, but Dutch

auctions are also possible. The largest possible share of non-competitive bids set by the Bank of Russia

for a credit institution is 50%.

Bank of Russia counterparty credit institutions may make bids to the Bank of Russia for participation in

a deposit operation by:

1. Passing to the Bank of Russia regional branch a tender agreement (compiled in established form);

2. Conducting negotiations through the Reuters Dealing System;

3. Making a bid to the MICEX Electronic Trading System (hereinafter MICEX ETS).

Deposit transactions via the Reuters Dealing

System and MICEX Electronic Trading System are

conducted on behalf of the Bank of Russia by its

Moscow-based authorised division, the Bank of

Russia General Economic Department. A Bank of

Russia counterparty credit institution is free to

choose any of the aforementioned ways of making

a bid for participation in a deposit operation.

Bank of Russia counterparties in deposit

operations are banks, settlement non-bank credit

institutions, and non-bank credit institutions

conducting deposit and lending operations.
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Role And Duties

According to the constitution, the Bank of Russia is an independent entity, with the primary

responsibility of protecting the stability of the nationalcurrency,theruble.It also holds the exclusive

right to issue rublebanknotes andcoins through theGoznakmint. The Central Bank issues

commemorative coins made of precious and non precious metals as well as investment ones made of

precious metals, which are distributed inside and outside the country.[5]

The coins of the Bank of Russia

are struck in the Moscow and St. Petersburg mints. The Bank's headquarters are on Neglinnaya Street

inMoscow.

In its monetary policy decisions the Russian Central Bank is less independent than many other central

banks. Although the Law on the Central Bank states that the central bank performs its duties

independently of other state organs, the law also says that the central bank plans and carries out

monetary and financial policy in cooperation with theRussian government.The Central bank annually

prepares a basic outline of monetary and financial policy for the following three years, which is

submitted to the government for discussion and presented to theState Duma.Its basic assumptions

are consistent with the governments economic forecasts. The central bank's monetary policy tools arelisted in the Law "On the Central Bank":

Interest rates on Central Bank operations

Reserve requirements

Open market operations

Refinancing of credit organisations

Currency interventions

Setting of money-supply targets

Direct quantitative restrictions

Bond issues

Function of Central Bank Russia:

The Bank of Russia is the mainregulator of thebanking industry. It is responsible for issuing

bankinglicenses and setting rules of banking operations andaccounting standards. The bank serves as

alender of last resort for credit organizations.

The Bank of Russia performs its functions in compliance with the Constitution of the Russian

Federation, Federal Law On the Central Bank of the Russian Federation (Bank of Russia) (hereinafter

referred to as the Bank of Russia Law) and other federal laws. According to Article 75 of the

Constitution of the Russian Federation, the principal function of the Bank of Russia is to protect the

ruble and ensure its stability. The Bank of Russia is the sole issuer of currency.
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Pursuant to Article 4 of the Bank of Russia Law, the Bank of Russia performs the following functions:

In collaboration with the federal government it elaborates and implements a single state monetary

policy.

It is the sole issuer of cash and organiser of cash circulation.

It approves the graphic designation of the ruble as a sign.

It is the creditor of last resort for credit institutions and it organises the credit institution refinancesystem.

It sets the settlement rules in the Russian Federation.

It sets the rules for conducting banking operations.

it services budget accounts on all levels of the Russian budget system, unless the federal laws

stipulate otherwise, by effecting settlements at the instruction of the authorised bodies of

executive power and government extra-budgetary funds, which are assigned the task of organising

the execution of and executing the budgets.

It efficiently manages the Bank of Russia international reserves.

It takes the decision on the state registration of credit institutions, issues banking licences to credit

institutions and suspends and revokes them.

It supervises the activities of credit institutions and banking groups.

It registers securities issues by credit institutions in compliance with federal laws.

It conducts independently or at the instruction of the Russian Government all types of banking

operations and other transactions necessary for the performance of Bank of Russia functions.

It organises and exercises foreign exchange regulation and control pursuant to federal legislation.

It sets the procedure for effecting settlements with international organisations, foreign states and

legal entities and natural persons.

It sets accounting and reporting rules for the Russian banking system.

It sets and publishes official exchange rates of foreign currencies against the ruble.

it takes part in the compiling of Russias balance of payments forecast and organises the compiling

of Russias balance of payments.

It sets the procedure for and conditions of foreign exchange purchases and sales by currency

exchanges and issues, suspends and revokes permits for the currency exchanges to organise

foreign exchange purchases and sales (the Bank of Russia will issue, suspend and revoke permits

for the currency exchanges to organise foreign exchange purchases and sales as of the day of the

coming into force of the corresponding amendments to the Federal Law on the Licensing of

Individual Types of Activities).

It analyses and makes forecasts for the situation in the Russian economy as a whole and by region,

especially the monetary, financial and price relations, and publishes the corresponding materials

and statistical data.

It pays compensation for household deposits with bankrupt banks uncovered by the compulsory

deposit insurance system in the cases and according to the procedure established by the federal

law.

It is the depository of the International Monetary Fund in the Russian currency and it conducts

operations and transactions provided by the Articles of Agreement of the International Monetary

Fund and the agreements with the International Monetary Fund.

It performs other functions in compliance with federal laws.


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Central banking

Central Bank Monetary Policy &Methods Of CBR Monetary Policy:

According to the Law on the Central Bank of Russia, the banks monetary-policy objective

is to maintain the stability of the ruble. In the early years, the CBR financed state budget deficits by

issuing credits to cover Government expenditures. The availability of such credits played a central rolein the high inflation that the Russian economy endured between 1991 and 1994. In 1995 new

legislation and regulations reduced this type of credit by prohibiting the use of credit to finance state

budget deficitsControl of the money supply by lending funds to commercial banks and by establishing

their reserve requirements.

In practice, the CBR has since 2009 been gradually relaxing ruble exchange rate targeting in favour of

inflation targeting. Other objectives of the CBR are the development and strengthening of the banking

system and ensuring the effective and reliable functioning of the payments system . In its monetary

policy decisions the CBR is less independentthan many other central banks. Although the Law on the

Central Bank states that the CBR performs its duties independently of other state organs, the law also

says that the CBR plans and carries out monetary and financial policy in cooperation with the Russian

government. The CBR annually prepares a basic outline of monetary and financial policy for the

following three years, which is submitted to the government for discussion and presented to the

Duma. Its basic assumptions are consistent with the governments economic forecasts. The CBRs

monetary policy tools are listed in the Central Bank Law:

Central Bank of Russia provides the monetary policy by:

Establishing of Central Bank rate

Establishing of the norms of required reserves for commercial banks

Refinancing operations

Operations on the open market

Currency operations and regulation

Issuing and impressments of money

Issues bond


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Central banking

The goals of banking sector development (strategy of CBR)

Increasing the protection of interests of depositors and other creditors of banks

Enhancing the effectiveness of the banking sectors activity in accumulating household and

enterprise sector funds and transforming them into loans and investments.

Making russian credit institutions more competitive.

Preventing the use of credit institutions in dishonest commercial practices and illegal activities,

especially the financing of terrorism and money laundering.

Promoting the development of the competitive environment and ensuring the transparency of

credit institutions.

Building up investor, creditor and depositor confidence in the banking sector.

Exchange rate policy

A definite change occurred in CBR exchange rate policy after the 20082009 crises. Before the crisis

the CBR had tightly steered the external value of the rubble, whereas after the crisis the CBR began to

gradually withdraw from active intervention. This change in policy has long been recommended to

Russia by international financial institutions, and the CBR has on several occasions cited it as a final

aim. The CBR states in its basic outlines of monetary and financial policy for 20122014 that the main

task of the bank during the period in consideration is to consistently reduce its direct influence on theruble exchange rate and to move to a floating exchange rate regime (Bank Rossii (2011f)). Russias

current currency regime can be classified as a managed float. The CBR steers the rubles exchange rate

vis--vis a currency basket consisting of 55 dollar cents and 45 euro cents. After the 20082009 crisis

the CBR introduced a rule for managing the rate. Accordingly, the ruble exchange rate vis--vis the

basket is to move within a corridor rather freely in line with supply and demand. When necessary, the

CBR intervenes in the market to keep the rate inside the corridor. Whenever the banks accumulated

interventions aimed at keeping the exchange rate within the corridor exceed a certain amount of

dollars, the CBR moves the position of the corridor by 0.05 rubles in response to what it considers a

permanent change in the operating environment.

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