A strong Central Bank mandate and credibility is essential for successful adoption of FIT. There is considerable evidence from around the world that weak legal mandates together with inadequate autonomy of central banks hinder the success of FIT. In this context, Sri Lanka will also have to introduce considerable changes to the existing mandate of the Central Bank through necessary legal reforms. The current framework is hampered by the focus on non-core activities, monetary financing and inadequate autonomy. These factors are structural impediments in the transition path towards FIT. Amending the Monetary Law Act (MLA) is, therefore, imperative to enhance the focus of the mandate as well as Central Bank autonomy, governance, transparency and accountability. These amendments would broadly include strengthening the mandate of price stability, separating the monetary and fiscal functions, strengthening the Central Bank’s autonomy, and introducing institutional arrangements for setting inflation targets and maintaining accountability. Second, to assure effective monetary policy conduct as a vital building block for maintaining low inflation under the FIT, we need to establish a sound, forward-looking decision-making process, based on reliable macroeconomic forecasts and projections. In this connection, the Central Bank has already improved technical capacity in modelling and forecasting of key macroeconomic variables. The Central Bank and the IMF have jointly developed a structural model-based Forecasting and Policy Analysis System (FPAS), which encompasses near-term and medium-term model-based projections. The current policy formulation process is gradually being aligned with the analysis based on FPAS.

  Policies will be adopted to reduce cheque usage in Sri Lanka by means of converting to digital payment mechanisms/method. The Central Bank will facilitate and promote private and government institutions to effect payments through any electronic retail payment system.   As Blockchain technology plays an important role to change the entire current financial transaction infrastructure within a digital eco system, the integration of distributed ledger systems into financial institutions and services will be facilitated in line with the regulations in the country.   With the increasing global popularity of digital currencies, the Central Bank intends to carry out a study in order to determine the effects of a digital fiat currency on the current economic landscape of the country.   The Central Bank aims to use a bottom-up approach in creating awareness from grassroot to institutional levels on the available and proposed payment modalities on a continuous basis.   In order to facilitate new developments of payment cards and mobile payments, the Central Bank intends to issue a revised Credit Card Guideline and guidelines on Minimum Compliance Standards for Mobile Applications that will be applicable to any institutions operating, facilitating and proving payment services for mobile applications. With a view to strengthening the financial intelligence environment, we will continue to coordinate with the stakeholders to develop Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) policies to implement the Financial Action Task Force (FATF) recommendations more effectively.