ECONOMYNEXT – Central bank lending to banks hit 48 billion rupees on January 08, up from 19 billion rupees a day earlier, official data showed, with market participants saying state banks were in a severe cash crunch. Sri Lanka’s government had built a so-called ‘domestic buffer’ by over borrowing from bonds and depositing in banks, when public debt was under the control of the central bank, apparently in a scheme to control market interest rates. However, analysts have warned that it is not possible to build domestic buffers to keep rates down and big withdrawals of deposits is likely to…
Sri Lanka cash short banks borrow Rs48bn in central bank credit
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