Common currency between Maldives and Sri Lanka a far cry

By Dinali Goonewardena

A COMMON currency between the Maldives and Sri Lanka has not been discussed by the Sri Lankan Authorities, a Central Bank official said yesterday.

There were reports over the weekend that the Maldivian President was seeking a common currency between the two countries.

“A lot of institutional infrastructure is required to enable a common currency,” Central Bank Deputy Governor K.G.D. D. Deerasinghe said referring to the modalities for a common currency for the SAARC region.

He cited the example of the European Central Bank and the independent monetary policy for the European Union which shares a common currency – the Euro. Dheerasinghe pointed out that the banking system has the flexibility at present to allow people to use the Sri Lankan Rupee in the Maldives and the Maldivian Rufia in Sri Lanka. The Asian Clearing Union in place allows imports and exports between countries to take place and a balance recorded for settlement between countries. The settlement is in a hard currency such as the US dollar. The Sri Lankan Rupee was trading at 7.15 Maldivian Rufia on 30 August.

Informal arrangements between neighbouring countries allows the use of a country’s currency across the border of a country. The United States and Canada are an example of this. A decision has not been taken at SAARC level but if it is, we have to implement it, Deerasinghe said.  President Mahinda Rajapaksa first mooted the idea of a common currency for the SAARC region at the seventh SAARC summit in 2007.

The SAARC which is due to hold a summit in November in Male’ Maldives has eight member countries at present Sri Lanka, India, Pakistan, Maldives, Bangladesh, Nepal, Afganistan, and Bhutan.