The Central Bank of Sri Lanka (CBSL) yesterday (5) noted that it has allowed Licensed Commercial Banks (LCBs) as well as National Savings Bank (NSB) to invest funds sourced externally in US dollar-denominated International Sovereign Bonds (ISBs) and Sri Lanka Development Bonds (SLDBs), equally splitting such investments into both ISBs and SLDBs, having considered all relevant risks. “With a view to mitigating the risk arising from their foreign currency borrowings, licensed banks are required to make such borrowings subject to a limit computed based on external credit rating and the capital adequacy ratios of the bank. According to the Central Bank, foreign currency liquidity positions are monitored through Basel III liquidity coverage ratio (LCR) and LCR monitoring tools to ensure that licensed banks keep adequate foreign currency liquid stocks to meet their foreign currency obligations. Further, licensed banks are required to strengthen the market risk management, foreign exchange trading activities, market conduct and treasury operations, to mitigate any foreign exchange risks in licensed banks. Accordingly, arrangements are already in place to settle $ 1 billion worth of ISBs maturing on 27 July 2021.

Source: The Nation July 05, 2021 21:56 UTC