News Today: Central Bank of Sri Lanka clarifies money printing claims

The Central Bank of Sri Lanka (CBSL) has clarified that recent claims in the media regarding the “printing” of Rs. 100 billion on 25 October 2024 are inaccurate and unfounded. The CBSL explained that the liquidity injected through Open Market Operations (OMOs) is a standard practice used to manage liquidity and stabilize short-term interest rates. OMOs are not equivalent to “money printing,” as this function is essential for balancing economic variables rather than increasing the money supply in the traditional sense.

In response to recent media reports, a CBSL spokesperson emphasized that OMOs are a routine central banking process intended to maintain an optimal liquidity level within the banking system, thereby ensuring price stability. Misinterpretations of this process as “money printing” overlook its role in managing short-term interest rates, a critical factor for economic stability. By adjusting liquidity levels, CBSL aims to stabilize the banking environment and uphold its commitment to economic stability.

This clarification is significant amidst claims that could affect public perception, especially during financially sensitive times. CBSL encourages accurate reporting and understanding of these banking operations to avoid misinterpretations that may impact public confidence in economic management.