Considering the recent inquiries on virtual currency usage in the international and domestic markets, the Central Bank of Sri Lanka (CBSL) wishes to inform the public of the risks associated with investing in Virtual Currencies. “Virtual Currencies (VCs)” are digital tokens created by private entities that can be obtained online through mining, Initial Coin Offerings (ICOs) or through Virtual Currency Exchanges. VCs are also commonly referred to as cryptocurrencies. Popular VCs include Bitcoin, Ethereum, Litecoin. While VCs have their own value denominations such as bitcoins for Bitcoin and ethers for Ethereum, they are usually valued in VC Exchanges in currencies issued by Central Banks, e.g., US dollar (USD), Japanese Yen, etc. However, it is important to note that VCs are not issued by Central Banks and are also not generally backed by underlying assets.
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Public awareness on Risks in investing in Virtual Currencies in Sri Lanka
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Central Bank commences the payment of increased compensation to the depositors of Failed Finance Companies
The Central Bank of Sri Lanka (CBSL) has commenced payment of the increased compensation amount of Rs 500,000/- under the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS), to the depositors / relevant legal beneficiaries of Central Investments and Finance Limited (CIFL), The Standard Credit Finance Limited (TSCFL), TKS Finance Limited (TKSFL), The Finance Company PLC (TFC), ETI Finance Limited (ETIFL) and Swarnamahal Financial Services PLC (SFSP).
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The Central Bank of Sri Lanka continues its Accommodative Monetary Policy Stance
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 07 April 2021, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 4.50 per cent and 5.50 per cent, respectively. The Board arrived at this decision after carefully considering the macroeconomic conditions and expected developments on the domestic and global fronts. The Board remains committed to maintaining the low interest rate structure, thereby ensuring continued support for a sustained economic recovery, in the context of the prevailing low inflation environment and well anchored inflation expectations.
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Erroneous News Report on Debt Service Payments on account of Sri Lanka Development Bonds and Foreign Currency Loans from Domestic Banks
The Central Bank observes, with disappointment, a certain newspaper today publishing an erroneous and unsubstantiated report of a planned delay in settlement of dues on account of Sri Lanka Development Bonds (SLDBs) and Foreign Currency Loans obtained by the Government from Domestic Banks.
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CCPI based Inflation increased to 4.1 per cent in March 2021
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) increased to 4.1 per cent in March 2021 from 3.3 per cent in February 2021. This was due to the statistical effect of the low base prevailed in March 2020. Meanwhile, Food inflation (Y-o-Y) increased to 9.6 per cent in March 2021 from 7.9 per cent in February 2021. Further, Non-food inflation (Y-o-Y) increased to 1.8 per cent in March 2021 from 1.3 per cent in February 2021.
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The Central Bank of Sri Lanka enters into a Bilateral Currency Swap Agreement with the People’s Bank of China
The Central Bank of Sri Lanka (CBSL) and the People’s Bank of China (PBoC) entered into a bilateral currency swap agreement with a view to promoting bilateral trade and direct investment for economic development of the two countries, and to be used for other purposes agreed upon by both parties. The People’s Republic of China remains Sri Lanka’s largest source of imports. In 2020, imports from China amounted to US$ 3.6 billion (22.3% of Sri Lanka’s imports).
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NCPI based Inflation increased in February 2021
Headline inflation as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) increased to 4.2 per cent in February 2021 from 3.7 per cent in January 2021. This was mainly driven by the monthly increase in prices of items in the Food category. Accordingly, Food inflation (Y-o-Y) increased to 6.9 per cent in February 2021 from 5.9 per cent in January 2021. Further, Non-Food inflation (Y-o-Y) increased marginally to 1.9 per cent in February 2021 from 1.8 per cent in January 2021.
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Increase of the Maximum Compensation Payment under the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS)
The Monetary Board of the Central Bank of Sri Lanka (CBSL) has decided to increase the maximum compensation payment under SLDILSS from Rs.600,000 to Rs.1,100,000, by Rs.500,000. This decision has been taken to provide further relief to the depositors of financial institutions regulated by CBSL in the event of a cancellation or suspension of the licences of such institutions.
Accordingly, the depositors of six (6) finance companies, namely, Central Investments and Finance PLC (CIFL), The Standard Credit Finance Limited (TSCFL), TKS Finance Limited (TKSFL), The Finance Company PLC (TFC), ETI Finance Limited (ETIFL) and Swarnamahal Financial Services PLC (SFSP) whose licences have been cancelled or suspended by the Monetary Board are eligible to receive the revised compensation amount.
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Sri Lanka Purchasing Managers’ Index - February 2021
Purchasing Managers' Indices for both Manufacturing and Services activities expanded in February.
Manufacturing PMI sustained its expansion in February 2021 recording an index value of 59.4, owing to the expansion in Production and New Orders. Further, Stock of Purchases and Employment as well as Suppliers’ Delivery Time remained expanded supporting to sustain the overall Manufacturing sector PMI at an elevated level.
Services PMI increased to 56.5 in February 2021 indicating a further improvement in the services sector. This increase was underpinned by the expansions observed in new businesses, business activities and expectations for activity.
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Concessionary Scheme for Leasing Facilities Obtained by Businesses and Individuals Engaged in Passenger Transportation
Considering the difficulties and constraints faced by businesses and individuals engaged in passenger transportation services due to the ongoing COVID-19 pandemic, the Central Bank of Sri Lanka (CBSL) has requested licensed commercial banks, licensed specialised banks, licensed finance companies and specialised leasing companies (financial institutions), to provide concessions for lease facilities obtained by such businesses and individuals for six months or a shorter period, as applicable, commencing from 1 April 2021.