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Monday June 27th, 2022

Sri Lanka tightens border transactions reporting after printing money

ECONOMYNEXT – Sri Lanka’s central bank has tightened border transactions reporting with a new system in the latest control on the people as the country suffers the worst currency crisis in the history of the intermediate regime monetary authority.

International Transactions Reporting System will be implemented from June 21.

A new bureaucracy called the ITRS Monitoring Unit, has been set up at the central bank.

“These reporting requirements are exercised based on the powers conferred by the Monetary Law Act, No. 58 of 1949, Banking Act No. 30 of 1988 and Foreign Exchange Act No. 12 of 2017,” the central bank said.

The ITRS will also serve the purpose of data reporting by banks for regulatory requirements. Data from the ITRS system is also used as supporting information for future policy decisions, such as origins of foreign currency outflows from the country for education, medical, tourism and other purposes.

The central bank brought tight exchange control in 1952, two years after its creation as the agency mis-targeted interest rates with liquidity injections and lost reserves inherited from a currency board as the US Fed tightened money policy in 1951.

In 1969 an import control law was brought in the midst of yet another currency crisis.

In the current crisis the agency has imposed surrender rules forcibly converted foreign earnings (as many third world central banks with monetary and exchange policy conflicts do) preventing citizens from protecting themselves from monetary expropriation and also barred importers from covering forward.

Exchange controls have been further tightened, creating parallel exchange rates as the newly printed money tries to find ways to get out.

Instead of fully ending money and exchange policy conflicts, the agency has caused to ban open account imports and trade taxes have been hiked. Such controls tend to promote undervaluation and corruption of border tax authorities critics say.

Recently, import licensing, another promoter of corruption was removed.

However interest rates have been raised, to slow private credit and attempt to restore credibility in a peg.

Car imports have also been banned, lowering tax revenues and forcing money to be printed.

The central bank has created up to 40 percent inflation based on the official index and has busted the currency from 200 to 370 levels over 2022 after busting it from 4.70 to 200 over the previous 70 years through conflicting money and exchange policies (anchor conflicts).

Since 2015 monetary instability has worsened as the agency tried to implement ‘flexible’ inflation targeting despite operating a foreign reserve collecting peg (a ‘flexible’ exchange rate).

Classical economists and analysts have called for laws to curb the independence of the central bank to engage in aggressive open market operations using ‘flexible’ policies and commit it to a tight single anchor regime, instead of curbing economic freedoms of the populace to perpetuate policy errors.

The full statement is reproduced below:

The Central Bank of Sri Lanka Launches the International Transactions Reporting System

Recognising the need to implement a comprehensive cross border transactions and domestic foreign currency transactions monitoring system as a key national priority, the Central Bank of Sri Lanka (CBSL) has implemented a new data collecting system known as the International Transactions Reporting System (ITRS) with the participation of Licensed Commercial Banks (LCBs) and Licensed Specialised Banks (LSBs).

The ITRS is a comprehensive data gathering system on cross border transactions and domestic foreign currency transactions and is aimed at filling multitude of existing data gaps. It will help policy formulation in many aspects by providing valuable inputs for both statistical and regulatory purposes.

The ITRS system will serve a number of purposes, including the enhancement of Balance of Payments Statistics, including export proceeds, imports, services account transactions such as IT/BPO transactions, workers’ remittances, financial account transactions, and many other statistical data inputs.

The ITRS will also serve the purpose of data reporting by banks for regulatory requirements. Data from the ITRS system is also used as supporting information for future policy decisions, such as origins of foreign currency outflows from the country for education, medical, tourism and other purposes.

The ITRS will also centralise information gathering by the Central Bank enabling a more convenient data reporting by banks. The Phase 1 of the ITRS goes live from 21 June 2022. The system is also expected to facilitate further centralised data reporting of the Central Bank in the next phases of the project.

All banks are required to report information related to transactions in the Phase 1 of the project as detailed in ITRS Interphase Requirements, through the ITRS ‘Web Application’, developed by the Central Bank.

The ITRS Monitoring Unit, established at the Central Bank, will closely work with banks on a daily basis to ensure the accuracy, timeliness and the coverage of the data provided.

These reporting requirements are exercised based on the powers conferred by the Monetary Law Act, No. 58 of 1949, Banking Act No. 30 of 1988 and Foreign Exchange Act No. 12 of 2017.

Comments (1)

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  1. Shakira smith says:

    The only way to solve this financial issue. Let’s people move money around freely in and out. it’s given and taken. When the money starts to float around..we may lose some we might gain some.. . You can limit the process. Just remember money makes money. This way banks know who’s doing what..people are already using the undial system behind your back. Thieves are making money. Take a look at other rich countries, such as Dubai, America, and Singapore, for them, it’s a business. There are twenty-four hours open countries. be wise you have no idea how many people want to come to our beautiful country for business purposes. Please open up to all of them, don’t hide. Don’t be afraid to be rich. After all, we are all human beings. Let’s help each other. penny look after the penny

View all comments (1)

Comments (1)

Your email address will not be published.

  1. Shakira smith says:

    The only way to solve this financial issue. Let’s people move money around freely in and out. it’s given and taken. When the money starts to float around..we may lose some we might gain some.. . You can limit the process. Just remember money makes money. This way banks know who’s doing what..people are already using the undial system behind your back. Thieves are making money. Take a look at other rich countries, such as Dubai, America, and Singapore, for them, it’s a business. There are twenty-four hours open countries. be wise you have no idea how many people want to come to our beautiful country for business purposes. Please open up to all of them, don’t hide. Don’t be afraid to be rich. After all, we are all human beings. Let’s help each other. penny look after the penny