Conflict Debate

June 21, 2012 (LBO) – Sri Lanka’s Central Bank has denied that there was a regulatory conflict where a fund under its control bought bank stocks it regulated, following concerns raised by Standard and Poor’s, a rating agency. S & P said there were regulatory conflicts because the Monetary Board or the governing body of the Central Bank was in charge of the Employees Provident Fund, a retirement fund of private citizens which bought into banks, while also regulating them.

“In this regard, the EPF wishes to state that different departments in the Central Bank deal in exclusive fields of different operations with high confidentiality and professionalism,” the Central Bank said in a statement.

“Within the Central Bank, the EPF Department functions independently from all other departments of the Central Bank, with stringent firewalls that have been established for this purpose.

“These are adhered to at all times and the integrity of the Central Bank or the EPF is not compromised in any way.”

The EPF said it would be prejudicial to the fund’s beneficiaries if it did not invest in banks which were among the fastest growing and most profitable sector in the country’s stock exchange.

The EPF had also attract