By Sri Lanka’s Colombo Port City, soon to be renamed the International Financial and Technological City, awaits Central Bank approval for its banking regulations, according to Saliya Wickramasuriya, a regulatory commission member. This multi-currency special economic zone will operate without exchange controls, though some national laws like the Employment Termination Act will still apply. Banks in the zone will be licensed by either the central bank or their country of incorporation.
The Port City Commission collaborates with relevant agencies like the Central Bank to prepare special regulations. Foreign exchange controls won’t apply here, but only select retail shops will accept rupees. Concerns persist about preventing money leakage versus attracting foreign investment, highlighting a regulatory dilemma.
Sri Lanka’s monetary instability, traced back to the establishment of the central bank in 1950 and exacerbated by IMF actions in 1978, prompts calls for legal restraints against mis-targeted rates and related economic issues.
