in the future. the safer assumption is the one underlying the drafting of the present bill : it is better in an uncertain economic world to be prepared for any eventuality. many features of the draft bill have been developed in the western hemisphere. others are found in one form or another in central banking legislation within the commonwealth. the basic pattern is suited for countries which are introducing central banking systems for the first time because it contains certain signposts and warning signals which should prove useful to administrators who do not have long established traditions and years of personal experience upon which to rely. it also provides a legal structure which is flexible and adaptable to changing economic conditions. within the structure there is ample room for the development of policies that are appropriate to the times. good central banking is less good law than good practice. the central bank of ceylon may make its influence felt more effectively through the development of day - to - day relations of confidence and understanding between itself and the various banking institutions than through the exercise of all of the powers given it under this bill. such influence is known in the textbooks as “ moral suasion ” and should be especially important in a small country where bis central bankers ’ speeches it should be possible to develop close relations between the central bank and each of the fairly limited number of banking institutions ….. ” having worked as an economist in the central bank and banker and investment banker in global financial environment, i perfectly understand what mr. exter meant. i invite you all to read the exter report if you are interested in knowing what type of institution the central bank is? i would pray that you, after reading the exter report, may not complain that central bank has not done enough to sri lanka economy and economic welfare of the public in terms of the mandate given to it by the public. the central bank ’ s all powers and functions center around two objectives. those are the securing of economic and price stability and financial system stability with a view to encouraging and promoting the development of the productive resources of sri lanka. this is not the forum for me to define technically each objective as there is no single accepted definition. however, those objectives in nutshell mean securing stability of the economy. economic and price stability means the economy running on a sustainable growth path with a supportive low rate inflation. financial system stability means financial institutions and markets operate without bubbles or contagious failures where the trust of the public in the financial system is maintained, stability of the economy, prices and the financial system

approaches and, most importantly, should help central banks better carry out their mission to promote the public welfare. the papers at this conference make a variety of welcome contributions to this endeavor. two contributions consider the implications of recent events for the conduct of monetary policy, both conventional and unconventional. 1 another paper addresses the relationship between monetary aggregates and financial stability. 2 and several papers investigate issues in the field of regulation and macroprudential supervision, including the design of an integrated framework for regulation, a proposal for see mark gertler and peter karadi ( 2012 ), “ qe 1 vs. 2 vs. 3... a framework for analyzing large - scale asset purchases as a monetary policy tool ( pdf ), ” march ; and athanasios orphanides and volker wieland ( 2012 ), “ complexity and monetary policy, ” forthcoming. see hyun jeong kim, hyun song shin, and jaeho yun ( 2012 ), “ monetary aggregates and the central bank ’ s financial stability mandate ( pdf ), ” march 6. bis central bankers ’ speeches dealing with systemically important resolution issues in the repurchase agreement markets, and a review of the progress to date in reengineering the financial system. 3 the discussants ’ remarks, the general discussions, and the policy panel will surely be very helpful in identifying fruitful directions for further research. i thank our guests for coming and participating. i once again welcome you to washington and wish you a stimulating and productive conference. see charles a. e. goodhart, anil k. kashyap, dimitrious p. tsomocos, and alex p. vardoulakis ( 2012 ), “ an integrated framework for multiple financial regulations ( pdf ), ” march ; viral v. acharya and sabri oncu ( 2012 ), “ a proposal for the resolution of systemically important assets and liabilities : the case of the repo market ( pdf ), ” march 23 ; and darrell duffie ( 2012 ), “ replumbing our financial system : uneven progress ( pdf ), ” march 17. bis central bankers ’ speeches