The Central Bank (CB) will set up an electronic trading platform and a Central Counter Party (CCP) clearing, for government securities with legal reforms, to broaden the secondary securities market, Central Bank Governor Dr. Indrajit Coomaraswamy told guests at the launch of the Central Bank’s ‘Road Map: Monetary and Financial Sector Policies for 2017 and Beyond’ at its auditorium last week.
The Bank will also set up a mechanism to disseminate secondary market information on debt instruments through the proposed e-trading platform and clearing house. “There will be a new set of operational processes for government securities in the secondary market in the near future,” the Governor said.
The Treasury is studying the possibility of implementing liability management of US dollars and Rupee denominated borrowings. “The Bank will work closely with the Treasury in this process,” the Governor said. The Central Bank has noted that there is a growing confidence in the currency among certain large foreign investors which implies that the country would be able to issue international bonds in Rupees which would minimize its exposure to exchange rate movements. “In this endeavour, we are working with the Euroclear System to facilitate to trade our bonds in their system in the future. This initiative will boost efficiency and effectiveness of settlement for investors and increase the pool of savings for investment in domestic securities,” Dr. Coomaraswamy said.
He said there will be a new Public Debt Act. A team of professionals is consolidating all the statutes relating to debt management and a separate Debt Management Unit is being set up at the Ministry of Finance.
“This is a good move as for years the Central Bank had to cope up with the conflict of interest in conducting an independent monetary policy while at the same time raising funds for the government as cheap as possible,” the Governor said.
With regard to the status of the economy, he said the stability of the economy is broadly on track as seen in the improving macro-fundamentals. The Central Bank is making its best efforts to ensure stable economic conditions on a sustainable basis. He said the Road Map will be a catalyst for the private and public sectors to plan activities and formulate policies during the year.However, we will not be hesitant to introduce new policies and plans depending on the needs of the economy and also if contingencies arise. “Some of these policies may be perceived as painful in the short-term, but they are meant to strengthen mid-term stability of the economy.
This is vital for long term prosperity of all Sri Lankans,” the Governor said. - LF