sunil mendis : creating a challenging and stimulating work environment new year message 2005 by mr sunil mendis, governor of the central bank of sri lanka, to all employees of the central bank of sri lanka, colombo, 1 january 2005. * * * i issue this traditional new year message at a time when the whole of sri lanka has been engulfed by a national tragedy caused by “ tsunamis ” that hit the country on 26th december, 2004. i take this opportunity to express our deepest condolence to the members of the families of bank employees who have lost their lives and to our employees and their loved ones who have suffered by this calamity. at the same time, i wish to share the sorrows of those employees who have lost their property. words are insufficient but hope that they would move forward from this tragedy. with the magnitude of the disaster, there is no question that our nation needs to be rebuilt. hence, as employees of a state organization which is at the apex of the country ’ s financial system, we have an invaluable task to perform. in this context, i place my message before you with the plea that we take part in the nation - building task by offering our maximum efforts. i have been greatly encouraged by the positive response which all the employees have demonstrated towards the provision of relief to victims and rebuilding of the nation. you would recall that in my first message to you on assuming the office of the governor of the central bank on the 01st july 2004, i stated that i was deeply conscious of the great honour attached to my appointment to this august post. now, i address you with 6 months ’ experience at the helm of this unique institution which is responsible for safeguarding the price stability and the country ’ s banking and payments system. during the last decade, the staff of the central bank faced several traumatic events and challenging situations. the central bank bomb blast, which took away the lives of 41 employees and caused injuries to nearly 1000 employees, was the most traumatic event. however, i understand that even those seriously injured joined the unaffected employees to offer their best efforts to the bank and as a consequence, the bank was in a position to resume normal work without an interruption within a short period of time. this reflects the resilience of our staff. thereafter, the bank was subject to a modernization and restructuring scheme. a major feature of the restructuring process was the offering of a voluntary retirement scheme ( vrs ) for certain categories of the staff

of the then prevailing exchange rate system and the crawling band regime to sustain themselves. immediately after the float, the market experienced some volatility as is usually expected. however, this volatility has been contained overall since then. this, not only brought confidence to the market, as evidenced by increased foreign exchange inflows, but also allowed greater flexibility and market opportunities to foreign exchange dealers of commercial banks. subsequent to the float, the central bank became a net buyer of foreign exchange from the market, in sharp contrast to its experience in the period prior to that. our objective with regard to the foreign exchange market is to ensure an orderly adjustment of the exchange rate, without excessive volatility. such adjustment should reflect the emerging economic fundamentals of the country. we should ensure that demand and supply mismatches are addressed on time so that there is no excessive volatility in the exchange rate. turning to the theme of this year ’ s conference, i. e. “ is it time for a common currency in the saarc region? ”, i believe that it would give rise to much interesting and thought provoking discussion and debate. we know that the saarc was established in 1985, with the objective to provide a platform for the peoples of south asia to work together in a spirit of solidarity, trust and understanding. it aims at accelerating the process of economic and social development of member countries. i believe the considerations of the timeliness to introduce a common currency for the region will be supportive towards the objectives and aims of saarc as well. while taking note that deliberations such as these would definitely lay the foundation for future developments in the saarc region, i take great pleasure in inaugurating this conference today and wish you all success with the conference. and i would also like to urge you to take a little time off to visit some places of interest, while you are in this beautiful country, sri lanka. thank you.