COLOMBO, October 20, 2026 — The Central Bank of Sri Lanka’s decision to move the settlement of US dollar-denominated foreign-exchange transactions to an account maintained at JPMorgan Chase Bank’s London branch from October 15, 2026, has introduced an important operational change to the country’s international banking arrangements, while highlighting the need for greater transparency over its financial implications.
Under the revised arrangement, outright foreign-exchange transactions and foreign-exchange swaps denominated in US dollars are settled through the London account. The change also applies to outstanding swap transactions with settlement dates falling on or after October 15.
Previously, local banks routed these settlements through the Central Bank’s US-based correspondent account, according to a report published by the Sunday Times on October 18.
Although the decision changes the location through which transactions are settled, it does not, by itself, establish that Sri Lanka is facing a dollar shortage, suspending foreign-exchange operations or introducing restrictions on private-sector foreign-currency holdings.
The distinction is important. Settlement arrangements determine how financial obligations between institutions are completed. They should not be confused with the rules governing the foreign-currency accounts operated by businesses and individuals.
Business Foreign Currency Accounts Remain Unaffected
Corporate Business Foreign Currency Accounts are expected to continue operating under existing arrangements, allowing companies to deposit, maintain and transact in foreign currency, subject to applicable regulations.
Exporters must also continue complying with the prevailing requirements governing the conversion of residual foreign-currency earnings into Sri Lankan rupees within the prescribed period.
There is no indication in the reported settlement change itself that these obligations have been amended or that businesses have been subjected to additional restrictions on their dollar accounts.
For companies engaged in international trade, the practical concern is whether the new settlement mechanism will maintain reliable transaction processing without introducing unnecessary costs, delays or administrative complications.
Central Bank Asked to Explain Operational Rationale
While changes to correspondent-banking arrangements can form part of routine financial administration, the Central Bank has a responsibility to explain significant operational decisions affecting the country’s international settlement infrastructure.
Among the matters requiring clarification are why the London account was selected, whether the arrangement is expected to improve settlement efficiency and whether transaction costs will differ from those associated with the previous US-based account.
Further questions concern the safeguards governing settlement continuity, the management of counterparty exposure and the procedures established to maintain regulatory compliance.
The location of a correspondent account is not, in itself, a reliable measure of financial security or operational efficiency. Those considerations depend on the arrangements supporting the account and the controls applied to transactions.
A clear explanation from the monetary authority would therefore help distinguish an administrative adjustment from any wider change in Sri Lanka’s international banking relationships.
Foreign Reserves Remain Central to Economic Recovery
The decision comes as Sri Lanka continues to rebuild its external financial position following its economic crisis.
Official reserve assets stood at approximately US$6.85 billion at the end of September 2026, compared with about US$6.93 billion at the end of August.
These reserve figures include proceeds from the People’s Bank of China swap arrangement, whose usability is subject to applicable conditions.
Expected financing from the International Monetary Fund and other multilateral institutions could provide additional support to the country’s external position. However, anticipated disbursements should not be treated as funds already received or as resources immediately available for every purpose.
The supplied mid-October indicative exchange-rate figures placed the dollar buying rate at approximately Rs.326.67 to Rs.326.73 and the selling rate at Rs.335.64 to Rs.335.73.
Exchange-rate movements remain consequential for importers, exporters, businesses with foreign-currency liabilities and households exposed to changes in the cost of imported goods.
Against this background, public confidence depends on accurate information about the country’s reserves, external obligations and financial arrangements.
Transparency, Not Account Location, Is the Real Test
The effectiveness of the revised settlement system will ultimately depend on its security, reliability, cost-effectiveness and compliance with international banking requirements.
Moving dollar settlements to London should not automatically be interpreted as evidence of financial distress. Equally, the technical nature of the decision should not place its operational rationale beyond public examination.
For ordinary citizens, the immediate consequences may be limited, particularly if existing banking services continue without disruption. Nevertheless, confidence in monetary institutions is strengthened when significant decisions are explained promptly and accurately.
Sri Lanka’s recovery requires dependable mechanisms for international trade, investment and financial transactions. The Central Bank can reinforce that confidence by clarifying the reasons for the London arrangement, its expected benefits and the safeguards protecting settlement operations.
The question is not simply where Sri Lanka’s dollar transactions are processed, but whether the country can demonstrate that the system remains secure, efficient and accountable.
