CCPI based Inflation increased to 4.5 per cent in May 2021

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100), increased to 4.5 per cent in May 2021 from 3.9 per cent in April 2021. This was driven by monthly increases of prices of items in both Food and Non-food categories. Accordingly, Food inflation (Y-o-Y) increased to 9.9 per cent in May 2021 from 9.0 per cent in April 2021, while Non-food inflation (Y-o-Y) increased to 2.2 per cent in May 2021 from 1.8 per cent in April 2021. The CCPI, measured on an annual average basis, remained unchanged at 3.9 per cent in May 2021.

Economic Research – Outlook Local / International

• Financial System Stability Review Governor CBSL
• Ratings Agency Opinion
• Asian Development Bank SE Asia Outlook
• Annual Report 

Virtual Currency

CBSL staff conducted an inter-departmental study and issued a report titled ‘A Study of Virtual Currency Schemes in Sri Lanka’. Based on this report CBSL has engaged a wide range of stakeholders including SLBA to review the initial study and to make recommendations for Developing a Suitable Regulatory Framework for Virtual Currency Transactions in Sri Lanka.

Digital Currency – Economist Newspaper 8 May 2021

Technological change is upending finance. Bitcoin has gone from being an obsession of anarchists to a $1trn asset class that many fund managers insist belongs in any balanced portfolio. Swarms of digital day-traders have become a force on Wall Street. PayPal has 392m users, a sign that America is catching up with China’s digital-payments giants. Yet, as our special report explains, the least noticed disruption on the frontier between technology and finance may end up as the most revolutionary: the creation of government digital currencies, which typically aim to let people deposit funds directly with a central bank, bypassing conventional lenders.
These “govcoins” are a new incarnation of money. They promise to make finance work better but also to shift power from individuals to the state, alter geopolitics and change how capital is allocated. They are to be treated with optimism, and humility.

Central Bank Digital Currency (CBDC) Economist Newspaper Article 19 April 2021

The Bank of England and HM Treasury have today announced the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential UK CBDC.

A CBDC would be a new form of digital money issued by the Bank of England and for use by households and businesses. It would exist alongside cash and bank deposits, rather than replacing them. The UK Government and the Bank of England have not yet made a decision on whether to introduce a CBDC in the UK, and will engage widely with stakeholders on the benefits, risks and practicalities of doing so.

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