DABF / HDBF – Economics of Money & Monetary Policy

The Economics of Money & Monetary Policy plays a vital role in understanding how money impacts economic activity and how central banks use monetary policy to achieve economic stability and growth. In Sri Lanka, the Central Bank of Sri Lanka (CBSL) is responsible for designing and implementing monetary policies aimed at controlling inflation, stabilizing the exchange rate, and fostering sustainable economic development. Given Sri Lanka’s economic challenges, including inflationary pressures and exchange rate volatility, effective monetary policy is crucial for ensuring financial and economic stability.

Globally, monetary policy is a key tool used by central banks like the Federal Reserve (USA) and the European Central Bank (ECB) to influence economic growth, manage inflation, and stabilize financial markets. These policies have wide-reaching effects on global trade, investments, and currency values, which in turn impact emerging economies like Sri Lanka. For example, shifts in global interest rates or monetary policy decisions in developed economies can affect Sri Lanka’s access to capital and foreign investment.

This course will explore the fundamental principles of money, its role in the economy, and how monetary policy is crafted and implemented both locally and globally. By understanding these concepts, students will gain the knowledge to analyze how monetary policy shapes the economic landscape in Sri Lanka and its interaction with the global financial system.