Ada Derana reliably learnt that Sri Lankan-born international banker Arjuna Mahendran has been appointed as the new Governor of the Central Bank of Sri Lanka.

Governor Nivard Cabraal resigned last Friday (Jan 9) shortly before Maithripala Sirisena was sworn in as President and Ranil Wickramasinghe of the United National Party as Prime Minister.

Mahendran was the head of the island’s Board of Investment (BoI) under a previous administration headed by Wickramasinghe and has been with international lenders including Credit Suisse, HSBC as well as Sri Lanka’s central bank.

He has nearly 30 years of extensive experience in the financial services industry across Asia, serving in both private companies and public sector organizations, and holds a Master of Arts in Philosophy, Politics, and Economics from the University of Oxford.

He is at the moment chief investment officer at Dubai-based EmiratesNBD’s wealth management arm.

Other names which had been considered for the post included Indrajith Coomeraswamy, who has served in Sri Lanka’s Treasury and the Commonwealth Secretariat.

Political sources say senior government officials would be replaced in the near term in consultation with other coalition partners. Sri Lanka yesterday appoint a new cabinet.

Ideally senior ministry secretaries should be appointed by a civil service commission or a constitutional council which is expected to be re-established by President Sirisena.

In Sri Lanka ministers are headed by ‘impermanent secretaries’ since the 1972 and 1978 constitutions which had led to a once=independent public service being made in to a rulers’ service undermining rule of law and justice, critics have said.

Sri Lanka’s central bank was created in the early 1950s when US interventionists established the Bretton Woods system of unstable pegged exchange rates allowing rulers to print money impoverish vast populations by generating inflation and currency depreciation with unsound money.

Its first governor was John Exter, a US citizen – who seemed to have become more convinced about sound money later in his life – but currency troubles emerged soon after his departure as interventionist rulers resorted to money printing to bridge deficits, making Sri Lanka a lagging nation in Asia.

A central bank which has a legal monopoly in money issue is the only agency that can keep inflation down and the exchange rate strong, safeguarding the real value of bank deposits and salaries of all citizens and saving of the old and pensioners.