Completing the topic of mitigating the aftermath of the pandemic, I would like to say that during the pandemic period we have been implementing measures to help reduce the impact of inevitable restrictions and support households and companies, without disrupting fundamental interconnections in the market and compromising stability. The latter is critical for the financial sector and essential for people and businesses using services provided by the financial sector. Currently, the financial system is functioning normally, is resilient and able to cover the needs of the growing economy. The slump of early 2020 was followed by a rather rapid recovery. This surge was coupled with a global rise in commodity prices and faster inflation both in Russia and worldwide. Demand has already restored, which is evident from all indicators. Contrastingly, production will need more time. This is due to disruptions in production chains that have not been fully restored yet. There are shortages of some components and materials and workers in certain professions. As the borders are closed, it is impossible to engage non-residents as much as before the pandemic. For instance, this problem is severe in construction, services to a certain extent, and agriculture. All these factors are pushing up prices. Taking into account the nature of inflation, namely the steady growth of prices across a broad range of products observed in recent months, it is clear that we may not just wait until this period ends. The Central Bank needs to use available instruments to bring inflation back to the target.
A regulatory framework for appointment of agents was also issued. The Direction largely focuses on the approval and selection process of agents, responsibilities of banks, permitted activities, risk management and oversight, customer protection and dispute resolution. Further, adoption of Sri Lanka Financial Reporting Standards 9 on financial reporting of financial instruments is another progressive policy measure adopted in line with international best practices. The Central Bank also issued guidelines to banks on the adoption of SLFRS 9 in consultation with the Institute of Chartered Accountants of Sri Lanka for consistent and prudent application of standards. The Central Bank has already initiated drafting a new Banking Act with a view to further strengthening the regulatory framework pertaining to licensed banks. The overall mandate for supervision and regulation, strengthening corporate governance, digital banking, consolidated supervision, resolution, monetary penalties/fines, ring-fencing, mergers, acquisitions and consolidation, subsidiarisation of foreign banks and differentiated regulatory frameworks for a tiered banking structure are the key policy aspects to be factored into the proposed Act. In addition, the Banking Sustainability Rating Index (BSRI) will be implemented from 2019 for risk based supervision and planning the supervisory calendar. As banks are frequent targets for cyber-attacks and other information security threats, a road map and a consultation paper were issued to improve technology risk resilience in the banking sector in line with international 24  standards and best practices. A Banking Direction in this regard will be issued in 2019.