An Open Letter To Dr. Indrajith Coomaraswamy, The New Governor Of The Central Bank!
By Hema Senanayake –July 8, 2016
Hema Senanayake
Dear Sir,
Finally we have a new governor appointed to the central bank. It’s you. After assuming duties you declared that you fear no one in discharging your duties. We, the readers and contributors to Colombo Telegraph eagerly waited for such a person to be appointed as the new governor for the central bank. We urged from the President, “to appoint a Governor who can win greater independence for the central bank by proving his professional wisdom in managing the nonphysical system of monetary infrastructure. Do not believe on guys who would talk about mere executing monetary policy, interest rates, reserve ratio, managing foreign reserves, listing rupee bonds in international markets etc. Trust on a guy who is capable of managing a dynamic hypothetical system flexibly and accurately” (June 19, 2016, Colombo Telegraph).
We hope that we now have found a true professional in you for the position. We may trust you, but still we need to verify as things get going under you. When I say this I am not that much concern about bond scams because it is something which can be prevented pretty easily if you are interested, instead I concern as to how you conduct the monetary policy and advise the government on fiscal policy and other matters on macroeconomics. This is the most important job that you have to do and this is the job that you have to fear no one in carrying it out. Why?
Dr. Indrajit Coomaraswamy received his appointment letter as the new Governor of the Central Bank from President Maithripala Sirisena, this morning (July 4) at the President’s residence. | Photo The President’s media unit.
The existing paradigm of central banking is now outdated. In regard to the execution of monetary policy what had worked for years had failed big time in 2008 with the financial meltdown in the United States and Europe. This failure was preceded by the failure occurred in Japan in early 1990s which is still continuing and the virtual economic collapse occurred in Argentina in Dec. 2001. Before the collapse, Argentinian fixed exchange rate system had been considered, including IMF, as a model for all developing countries. After these crises, the world is now left with no proper model for central banking and this is true for developed countries whose domestic currencies are used as international reserve currencies by other developing countries and is true for countries like ours which use some other country’s domestic currency as international reserve currency. So what we practice now can be defined as “ad-hoc” central banking. In this context what you had learnt in regard to central banking in any prestigious university might have outdated by now.
