The Central Bank of Sri Lanka has dismissed claims of reckless money printing, clarifying that recent changes were only adjustments in the broad money supply (M2b) — a technical definition that includes loans, foreign assets, and government securities.
The Central Bank of Sri Lanka has clarified that money was not printed, but instead reflected in changes to the broad money supply (M2b). In a press release, the Central Bank highlighted that money printing and money supply are two different concepts that are often confused or misrepresented.
“Money printing” refers to the issuance of new money into the economy by the Central Bank, typically through the purchase of government securities. This process increases the stock of government securities held by the Central Bank while injecting new money into circulation.
However, the broad money supply (M2b) is a much wider measurement of total money in the economy. It not only includes currency held by the public but also loans provided by the banking system to the private sector, the government, and state-owned commercial enterprises. In addition, foreign assets held by the banking system are factored into M2b.
The Central Bank emphasized that interpreting changes in broad money supply as “money printing” is misleading. According to the release, this confusion arises either due to a lack of understanding of monetary definitions or deliberate attempts to mislead the public.
The clarification comes at a time when debates on money printing, inflation, and monetary stability have intensified in the country. The Central Bank reaffirmed that responsible monetary policy remains its priority, ensuring financial stability while managing liquidity in line with economic realities.
