ECONOMYNEXT – Sri Lanka will create a single personal foreign currency bank account for residents, non-residents and non-nationals from April 2018, under a liberalized foreign exchange law.
Sri Lanka enacted draconian foreign exchange controls as forex shortages were created by a money printing central bank which was set up in 1951, abolishing a currency board, also ending free capital mobility.
Residents of Sri Lanka, like to operate dollar accounts to protect their savings from effective expropriation through chronic currency depreciation, or to gain some degree of capital mobility, despite lower interest rates on such accounts.
The phenomenon, known as ‘deposit dollarization’ is also found in other countries with bad central banks which produce unsound money and forex shortages. Allowing greater deposit dollarization represents and expanded economic freedom.
All existing Non-Resident Foreign Currency Accounts (NRFC), Resident Foreign Currency Accounts (RFC), Resident Non-National Foreign Currency Accounts, Non-Resident Non-National Foreign Currency accounts will re-designated as Personal Foreign Currency Accounts.
Existing Foreign Exchange Earners Accounts (FEEA), Inward Remittance Distribution Accounts (IRDA) and Foreign Currency Accounts for Agents of Foreign Shipping Line or Air Lines (FCAAF SAs) will be treated as Business Foreign Currency Accounts (BFCAs).
Resident Guest Foreign Currency Accounts and Senior Foreign Nationals Special Accounts will remain as under the old law.
Personal Foreign Currency Accounts (PFCAs) and Business Foreign Currency Accounts (BFCAs) may be opened and maintained as Current (but without cheque drawing facility), Savings or Term Deposit accounts in any designated foreign currency.
Personal forex accounts could be joint accounts. Up to 10,000 US dollars could be withdrawn from such accounts for travel. (Colombo/Nov28/2017)