The Evolution of Central Banking and Monetary Policy in the Asia-Pacific

The Evolution of Central Banking and Monetary Policy in the Asia-Pacific

Akhand Akhtar Hossain

This book of case studies is a contribution to monetary macroeconomics in which country-specific experience and issues in inflation and monetary policy are reviewed and analysed in an historical context. In doing so, the key ideas and views on the sources and dynamics of inflation and monetary-policy behaviour are investigated after taking into account institutional arrangements for the conduct of fiscal and monetary policies. This book selects for study twelve diverse countries from the Asia-Pacific region including the US, China, Australia, India, Japan, Hong Kong SAR (China), South Korea, the Philippines, Singapore, Sri Lanka, Thailand and New Zealand.

Chapter 11: Sri Lanka

Akhand Akhtar Hossain

Subjects: asian studies, asian economics, economics and finance, asian economics, money and banking


Sri Lanka is a multi-ethnic, multi-religious country. It is an island economy situated off the east coast of south India, almost a stone’s throw across the Palk Strait from the Indian province of Tamil Nadu. Immigrants from Asia and Europe have settled this island dating back more than three thousand years. Sri Lanka’s population numbers about 20 million, occupying a land mass of about 66 000 square kilometres. Population density is relatively low at around 323 persons per square kilometre. About 75 per cent of its people are Sinhalese-Buddhists. The remaining 25 per cent of the people is diversified across a range of ethnic-religious identities; the major groups being Tamils (mostly Hindus), Muslims and Burghers-Christians. As with Christianity in many Christian-majority countries and Islam in Muslim-majority countries, Buddhism in Sri Lanka receives special status in the legal system. The Sri Lankan constitution, for example, requires all Sri Lankans to commit ‘to protect and foster the Buddha sasana’. The recent civil war that ravaged Sri Lanka for about three decades has long historical roots. Sri Lanka is strategic in South Asian politics because of its location as the westerly ‘headland’ of the Bay of Bengal, because of its deep harbours and because of its other geography.

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