Money was found by people for doing easily their economic dealings. With the expansion of the currency, individuals were able to get the value for their products in cash, to collect money, to succeed their various needs effectively by using money. With time, an institution system pervaded all over the world to collect money and pay money to other persons and institutions as needs of proprietor of money. Therefore, people who live in a country can reserve earned money through the collection of money and payment settlement system. Such a complex and well-structured corporate framework can be found in every country in the world. It is called “Financial System” in that country.
The financial intermediation is the most important task of a financial system. In the current world, the financial intermediation as well as the payment and settlement process are conducted by banks and the various financial institutions. Today, a regular and legal regulatory system with institutional framework can be seen almost everywhere in the world.
In this report, I mention about financial system in Sri Lanka. Under this I report about the components of the financial system, role of the central bank, financial stability and development, and financial system issues and challengers.
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