at the end of 2001. around a third of our staff opted for the vrs and left the bank. as a result, all of you were forced to re - organize your work practices, automate certain functions and put extra effort to ensure that the output of the bank would not suffer as a consequence of the lower staff strengths. although this would have caused problems at the initial stage, i believe that you managed to cope admirably in the face of this challenge. as you are aware, the central bank ’ s focus and functions have evolved over the years in response to changes in the economic environment. in keeping with trends in central banking around the world, the objectives of the central bank of sri lanka were streamlined by amending the monetary law act ( mla ) in 2002 which defined the bank ’ s core objectives and freed it from the multiple objectives originally assigned to it. accordingly, the central bank now pursues the core objectives of economic and price stability ( through appropriate monetary policy ) and financial system stability ( mainly through its role as a supervisor and regulator of the financial sector ). the central bank accordingly will, over time, devolve some of its other functions including agency functions to other institutions. however, it still has a major role to play in the interim to build up capabilities of the institutions earmarked to take over the functions performed by the bank at present. also, it is expected that there would be a further outsourcing of administrative and ancillary functions of the central bank. with the change in the mla, the organizational structure of the central bank has undergone a major transformation on a function - oriented basis to support its objectives and functions. the departments of the bank were grouped into four major categories under the headings of price stability, financial system stability, agency services, and corporate and support services. the two deputy governors have been entrusted with the responsibility of overseeing the achievement of the two core functions. the vacancies to the posts of assistant governors ( ags ) have been filled and they have been entrusted with line responsibilities with a view to building the 3rd and 4th layers of succession in the bank ’ s managerial hierarchy. price stability means maintaining a low inflation rate. central banks are mandated to maintain price stability as their main objective in order to create a conducive environment for long - term sustainable economic growth by eliminating uncertainties, protecting the value of financial assets, enabling all economic agents to take a long - term view of the economy and ensuring the well

areas which include : • staff redeployment to place round pegs in round holes ; • full implementation of the it programme ; • operationalization of the new economic policy department ; • reform and restructuring of the security services division ; • reform of the budget and procurement processes ; • out - sourcing of some non - core functions ; • restructuring of the training programme to ensure value for money ; and • implementing a staff welfare package that ensures a motivated work force. the task of meeting these challenges is enormous. the bank is currently facing budget constraints, arising from increasing costs, the financing of the project eagles, the implementation of the banking sector consolidation programme, and the take - over and restructuring of the mint, all in the face of shrinking revenues - as monetary policy becomes efficient. but we shall strive to fulfill our mission and to keep to our promises. on the part of staff welfare, as i said in my 2004 end of year address, staff welfare remains our number one priority and inspite of the dwindling resources we shall continue to meet our commitments to staff. ladies and gentlemen, let me note that the strategic position of the currency and branch operations department under the new structure derives from the fact that the branches are expected to serve as front offices for the other departments in the bank, while the branch network is expected to serve as an effective delivery channel for banking services to the customers. to this end, branch controllers and currency officers must see themselves as the ambassadors of the bank. before i conclude, let me restate that, as the bank ’ s representatives in your respective branches and offices, management expects you to maintain high standards of professionalism and integrity in your conduct, while upholding the bank ’ s values. we are concerned over the increasing rate of fraud in the bank in recent times. while we are improving processes and procedures and strengthening internal controls, we need to closely monitor the activities of staff, to achieve zero tolerance for fraud, at each branch level and bank wide. for the avoidance of doubt, management is firmly committed to stamping out corruption in the bank and will take every necessary measure to protect the bank ’ s assets. may i urge you all to participate actively in this very important conference in order to derive the maximum benefits from it which you will find useful in improving the quality of services in your respective branches and currency centres. on this note, i declare the 26th annual branch controllers ’ conference open and wish you fruitful deliberations.