{"id":102821,"date":"2020-05-25T16:02:59","date_gmt":"2020-05-25T23:02:59","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=102821"},"modified":"2020-05-25T16:02:59","modified_gmt":"2020-05-25T23:02:59","slug":"sri-lanka-needs-to-change-its-monetary-unit-part-2","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2020\/05\/25\/sri-lanka-needs-to-change-its-monetary-unit-part-2\/","title":{"rendered":"SRI LANKA NEEDS TO CHANGE ITS MONETARY UNIT (PART 2)"},"content":{"rendered":"<h2><span style=\"color: #0000ff;\"><em><strong data-rich-text-format-boundary=\"true\">BY EDWARD THEOPHILUS<\/strong><\/em><\/span><\/h2>\n\n\n<p>It is considered that the rapid\ndecline of Sri Lanka rupee created a favorable environment for exporters and\nSri Lankans who are in foreign employment, however, the reality is that a rapid\ndecline of the rupee value has massively impacted on the increase in domestic\ninflation as well as the increase in the budget deficit which forces to borrow\nto cover the budget gap and increase taxes.&nbsp;\nThe current low foreign value of Sri Lanka rupee is a hindrance to\nmaintain macroeconomic stability in the country achieving sustainable economic\ngrowth.&nbsp; <\/p>\n\n\n\n<p>After ending the war in 2010, there\nwere many positive signals that the country should have moved upward trend and\nseveral sectors of the economy such as tourism, agriculture, and fisheries are\nembarking to high growth.&nbsp; Sri Lanka is\nrecognized as an emerging economy.&nbsp;\nAlthough the size of the economy needs to be expanded to 10 times than\ncurrent level, foreign assets and reserved should visibly be increased,\neconomic policy actions have less focused on macroeconomic fundamentals, in the\neffort to gain international value to Sri Lanka, it is essential a strong\ncurrency unit for reflecting the international value of Sri Lanka\u2019s assets.<\/p>\n\n\n\n<p>What should do to give international\nvalue to Sri Lanka\u2019s assets?&nbsp; Sri Lanka\ndoes not want an over value currency unit, which erodes international\ncompetitiveness.&nbsp; Sri Lanka needs to work\nas a strong merchandise and service export base in Asia.&nbsp; However, the rupee will not support to\nfulfill the expectations of the nation and this writer considers that changing\nthe monetary unit rupee replacing the RIX DOLLAR would support to maintain\ninternationally better valued currency unit in the country, which represents a\nreasonable international value of Sri Lanka\u2019s assets.&nbsp; The current 100 rupees could be set to one\nRix dollar, in which a USD will be equivalent to Rix $ 1.20 and all currency\nand rupee assets could transfer to Rix dollar bases according to and this would\nnot be a complex process.&nbsp; Sri Lanka has\ngood experience in demonetarizing policy by the cancellation of Rs 100 and 50\nnotes in 1970 and people can be adapted into new currency without any\ndifficulties. <\/p>\n\n\n\n<p>Many countries in the world have\nchanged their currency units and many countries will be changed their currency\nunits in the future and this will not be the end of the world.&nbsp; The change of Sri Lanka rupee to Rix dollars\nwith a new parity will reduce current administration cost for maintaining a\nmassive volume of notes and new dollar notes could be issued with a yellow back\nwith a picture of a branch of Jayasri Mahabodhi in similar denominations for 1,\n2, 5, 10, 20, 50, 100, 200 and 500 denominations.&nbsp; When people are telling greenback to USD,\nthey will tell yellow back to Sri Lanka\u2019s currency.&nbsp; <\/p>\n\n\n\n<p>In the year 2000, all European\ncountries change their exchange unit to Euro, it was a peaceful transformation\nand at the beginning, Euro had a declining trend but later it came up as a\nstrong currency unit despite some problems in certain European countries such\nas Greece, Spain, Portugal, and Italy.&nbsp;\nUnder the market economic policies that widely initiated after the cold\nwar, many countries allowed to float domestic currency units but primary\ncommodity-exporting countries\u2019 currency units badly declined despite a strong\nrecovery of the economy in the mid of 1990.&nbsp;\nMetal and oil prices were double during the past two decades despite a\nfavorable increase in prices and improvement of domestic economic conditions,\ncurrency units are subject to decline, which creates many problems for these\nprimary commodity-producing countries. Commodity prices have changed during the\npast decade and the COVID 19 further declined the prices.&nbsp; Many countries talk going back to production\nbases and changing the economies.&nbsp; The\nIMF has concerned about the declining trend of hard currencies but reluctant to\ntalk about the declining trend of emerging nations.<\/p>\n\n\n\n<p>Sri Lanka\u2019s economic renaissance\nafter ending the terrorist war in 2010 invites radical changes in many areas\nand changing the monetary unit is an essential change that should have effected\nfrom 2015 to boost the economy as well as to give due international recognition\nto Sri Lanka.&nbsp; The yahapalana regime did\nnot concern in these matters, they were hanging in unnecessary issues.&nbsp; <\/p>\n\n\n\n<p>Politically, Sri Lanka has a good\nenvironment to change the name of the official currency unit.&nbsp; After becoming the president, Mr.Gotabaya\nRajapaksa it seems that he has an intention to make a fresh start in all areas\nof the economy and change of the name of the monetary unit will be the\nbeginning of a renaissance in all areas of the economic, political, social,\nethnic and religious system. Mr.Gotabaya Rajapaksa can give excellent\nleadership.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>BY EDWARD THEOPHILUS It is considered that the rapid decline of Sri Lanka rupee created a favorable environment for exporters and Sri Lankans who are in foreign employment, however, the reality is that a rapid decline of the rupee value has massively impacted on the increase in domestic inflation as well as the increase in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124],"tags":[],"class_list":["post-102821","post","type-post","status-publish","format-standard","hentry","category-edward-theophilus"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/102821","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=102821"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/102821\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=102821"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=102821"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=102821"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}