1  Road Map: Monetary and Financial Sector Policies for 2019 and Beyond  Delivered by Dr. Indrajit Coomaraswamy Governor Central Bank of Sri Lanka 2 January 2019  3  1. Introduction Your Excellencies, Members of the Monetary Board, Senior Deputy Governor, Deputy Governors, Assistant Governors and Officials of the Central Bank, Distinguished Invitees, Ladies and Gentlemen, It is a pleasure for me to warmly welcome you to the presentation of the Road Map of the Central Bank of Sri Lanka, which articulates the broad direction of monetary and financial sector policies for the period 2019 and beyond. I am also pleased to mention that we are continuing with our tradition of sharing the future direction of policies through the twelfth Road Map of the Central Bank of Sri Lanka. The Road Map is a well received and important policy document which delivers several benefits to all stakeholders of the economy. We expect that this announcement would guide and shape your own policies and plans effectively which will ultimately contribute to the overall economic development of the country and better living standards for our people. Let me begin by explaining our policy stance and our assessment of the economy over 2018. The Sri Lankan economy faced heightened challenges in 2018, emanating mainly from the global economic, financial and geo-political developments that adversely affected the external sector. There were also several domestic challenges. Political uncertainties, especially during the last quarter of the year, amplified challenges to overall macroeconomic stability.

As the regulator, we believe that share ownership in banks needs to be broadbased to strengthen corporate governance and to avoid ownership concentration, dominance in the boards, conflict of interest and risks associated with related party transactions. Therefore, the existing requirements on share ownership will be reviewed and certain additional measures will be brought in. In addition, fit and proper assessment criteria for appointment of Directors, CEOs and Key Management Personnel of banks will be strengthened further to appoint the most suitable and qualified individuals to the top positions in banks. Only persons with proven track records of good conduct and financial integrity would be considered for such appointments. Moreover, a broad-based policy on employment of expatriate staff considering the needs for external expert contribution will be introduced. Considering the significant developments in the banking environment and the professional accounting/auditing landscape, the minimum criteria for appointment of external auditors has already been reviewed and the panel of Qualified Auditors will be amended accordingly. With a view to further strengthening the market conduct and practices of treasury operations of licensed banks, the Central Bank intends to establish a new regulatory framework to ensure that treasury operations of licensed banks are carried out prudently and in line with the international best practices. The Central Bank will also formulate a crisis preparedness plan for the banking  25  industry, to minimise the adverse impact on troubled banks and mitigate spillovers. A consultation paper will be issued to banks in this regard.