There are new areas that we are looking to operate under the macroprudential surveillance framework of the Central Bank. These include analysing trends in banking sector and non-banking sector exposure to the corporate sector, assessing the impact of dynamic provisioning frameworks on the banking sector, analysing financial sector exposure to the household sector, evaluating the possibility of introducing Escrow accounts to safeguard the residential property buyers and to achieve long term stability of the real estate market as well as commencing multivariable stress tests for LFCs covering credit, market and liquidity risks. We have recognised risk management as a key strategic priority of the Central Bank, and we are in the process of implementing an Enterprise-wide Risk Management (ERM) Framework, which is intended to promote a culture of informed risk-taking at all levels. Accordingly, the Risk Governance Framework and the Risk Management Policy of the Central Bank were approved by the Monetary Board in 2018, and relevant committees were formed and meetings were convened to make the framework functional. We expect to develop Risk Registers and implement an Incident Reporting Mechanism in 2019. With regard to financial risk management, we will further strengthen the risk management framework of the fund management activities. With the growing priority being attached to achieving the Sustainable Development Goals (SDGs) as well as promoting greener and climate friendly 31  growth activities by providing productive and sustainable investment, the Central Bank initiated a process of promoting sustainable finance practices in Sri Lanka in 2017.

Accordingly, with the view of providing policy direction to the financial sector, the Central Bank is in the process of developing a ‘Road Map for Sustainable Finance in Sri Lanka’. For this process, we are obtaining the technical assistance from International Finance Corporation of the World Bank (IFC-WB) and financial assistance from the United Nations Development Programme (UNDP). Going forward, we intend to launch the ‘Road Map for Sustainable Finance’ during 2019 which would serve as a reference for all stakeholders in formulating their own sustainable finance policies. 32  4. Policies Related to Ancillary and Agency Functions In addition to our core functions, we have effectively performed several ancillary and agency functions as well. We have performed these functions to support the smooth functioning of the economy and the financial system, thus contributing to strengthen the broader economy. Currency Management The Central Bank has the exclusive right to issue currency notes and coins on behalf of the government. During 2018, we continued to perform this function as per our mandate. In spite of increased use of technology driven non-cash modes of payment, demand for currency notes and coins increased in 2018 in line with the expansion of the economy. In 2018, we launched a new coinage and issued a commemorative currency note and a coin. Further, we have introduced policy measures against willfully altered, defaced or mutilated currency notes in order to preserve the quality of currency notes in Sri Lanka.