Price  operations through a new fiscal  stability is interpreted to mean low,  framework, aimed at strengthening  stable and predictable levels of inflation,  fiscal sustainability in the medium-term. which is conducive for fostering  This framework is embedded in the IMF-  sustainable long-term economic growth  EFF arrangement. and employment in a country. Price stability is instrumental in keeping nominal interest rates low, thereby enabling an economy to exploit its growth potential, while both consumers and producers can make economic decisions with confidence and certainty. These efforts will complement the expected improvements of the Central Bank with regard to two key policy frameworks in relation to monetary policy. a. The conduct of monetary policy will  Therefore, modern central banks  be strengthened through the move  predominantly focus on achieving price  towards a flexible inflation targeting  stability as a pre-condition for  (FIT) framework. sustainable growth. b. A properly designed and widely In this context, I would like to indicate  accepted framework for exchange  that the Central Bank and the  rate management will also be  government are working towards  introduced to establish a market-  establishing a well-designed  based exchange rate system in the country. Central Bank of Sri Lanka – ROAD MAP 2017  11  The broad-based reform actions under  towards new frameworks, such as  the EFF arrangement with the IMF will  inflation targeting. complement these efforts.
But I must stress the urgency here: we don’t have much time left, one or two years. Everybody is talking about a CBDC; but first, and much earlier, we need to regulate crypto-assets, and then implement EPI. The third and final action: be ready to launch a general purpose CBDC, which means for the public and for the financial sector, to reassert the anchoring role of central bank money in case of need. Let me insist on the dual purpose: public attention is naturally focused on a retail digital currency, for individuals and firms. But a “wholesale” or “interbank” form is also important, particularly as the use cases are already even more obvious, and because this interbank money will be vital for cross-border transactions. The next investigation phase and technological prototypes selected by the Eurosystem will, in my view, need to cover both these functions, separately or together. The results of the ECB’s public consultation, published mid-April, show that European citizens regard two aspects as particularly important: privacy and security. Therefore, the retail CBDC would be made available to citizens as an easy-to-use, secure and accessible payment instrument, that protects user privacy and can be used for all types of payment. How would it be distributed? We want to develop a model where CBDC is distributed by intermediaries, to allow private players, first and foremost the banking sector, to keep a key role. Let me be clear on this: it is not the Banque de France’s or any Central Bank’s role to open bank accounts!