Sri Lanka is currently in the research phase. The Central Bank of Sri Lanka has written about CBDCs in a news survey, but it’s unclear what it has done beyond this limited work. Still, in 2024, central bank officials reportedly told the Sir Lankan Parliament that a CBDC would be introduced by 2025.

CBDC History and Development

In 2020, the Central Bank of Sri Lanka published a news survey that briefly discussed what a CBDC is and how it relates to other forms of money. The article took no stance on whether the Central Bank of Sri Lanka would issue a CBDC or take further steps to research CBDCs.

In 2024, officials from the Central Bank of Sri Lanka reportedly told Parliament that a CBDC might be launched by 2025. However, it’s unclear how realistic that timeline is or whether the central bank is actually planning to move by this time. When reviewing the meeting with Parliament, the central bank officials also mentioned conducting proof-of-concepts and pilots.

Human Rights and Civil Liberties Concerns

Sri Lanka earned a 54 out of 100 in Freedom House’s 2023 Freedom in the World Report. As Freedom House and others have noted, there are many issues present in Sri Lanka. However, the most relevant issues pertaining to the issuance of a CBDC are that of surveillance and corruption. The issuance or adoption of a CBDC in Sri Lanka could worsen these issues.

According to the U.S. State Department, Sri Lankan authorities are “able to enter homes and monitor communications without judicial or other authorization” and that “civil society and journalists reported allegations of both online and offline surveillance.” Unfortunately, a CBDC could be used to greatly expand surveillance by putting financial records on government databases by default.

“A culture of impunity regarding official corruption appears to exist in Sri Lanka,” according to Freedom House. The U.S. State Department also reported that “Corruption remained a significant and continuing problem, including at the highest levels of government” and that “International companies frequently reported requests for bribes.” The existence of pervasive corruption is a major concern with CBDCs because it calls into question any promises that might be made by the government to limit surveillance, control, or other risks of CBDCs. Furthermore, the existence of corruption calls into question whether CBDC policies might be designed to exert political favoritism through subsidies, price controls, or other targeted restrictions.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.

For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.