"Proposed Monetary Law Act will strengthen financial stability of the country" : Governor of Central Bank

Colombo (News 1st) - Speaking to News 1st exclusively, Governor of the Central Bank Dr.Indrajit Coomaraswamy stated that the proposed Monetary Law Act, will strengthen stability in monetary policy. The government is currently in the process of introducing a new law governing the Central Bank, in place of the current Monetary Law Act No. 58 of 1949. Dr Indrajit Coomaraswamy stated that whenever the Government had fiscal indiscipline and short of money, it forces the Central Bank to print money noting that effectively printing causes inflation. He further highlighted that some of that money leaks into the imports and puts pressure on the Balance of Payment. He mentioned that the worst thing that the Central Bank can do is to print money and buy treasury bills from the government in the primary auction. He reasoned that therefore the purpose of the proposed new monetary law act is proposing that the Central Bank by law should be prevented from participating in the primary auction for treasury bills. "It should not print money. It should be prevented from printing money, and this would be a significant improvement in our monetary policy formulation", he continued.