The Sri Lankan rupee

How the rupee pushed out sterling

Sterling became Ceylon's official currency in 1825, replacing the rixdollar at 13⅓ rixdollars to the pound. On 26 September 1836 the Indian rupee was made the island's standard coin. Ceylon went on keeping its accounts in pounds, shillings and pence while people paid in rupees and annas, at a fixed accounting rate of two shillings to the rupee.

The Indian rupee became unlimited legal tender on 18 June 1869. It was decimalised on 23 August 1871, and from 1 January 1872 the rupee of 100 cents was the island's money of account and its only legal tender, one rupee to two shillings and threepence.

Who issued notes before a central bank existed

The Dutch had printed the island's first banknotes on 10 May 1785, in pathaga, to cover military spending that had nearly emptied the treasury. Under the British the General Treasury issued pound notes from 1827 to 1855. Private banks issued notes between 1844 and 1884, among them the Oriental Bank Corporation and the Hong Kong and Shanghai Banking Corporation.

A banking crisis in 1884 ended that. The Orient Bank ran short of cash and depositors ran on the other exchange banks, so the government passed the Paper Currency Ordinance of 1884, modelled on a Mauritius ordinance of 1876. It set up a currency board, the Board of Commissioners of Currency, made up of the Colonial Secretary, the Treasurer and the Auditor-General. Its notes could be exchanged one for one against Indian silver rupees at the commissioners' office. During the Second World War, under Emergency Powers Acts of 1939 and 1940, the board issued small notes from 5 cents to one rupee to cover a shortage of coins. The 5 cent note carried the printed images of a 2 cent and a 3 cent postage stamp.

What the central bank took over

The Central Bank of Ceylon was established on 28 August 1950 under the Monetary Law Act, No. 58 of 1949, with a Monetary Board to administer the issue of notes and coins. British-era notes stayed in use until 1951 and the coins until 1963. The bank has been the Central Bank of Sri Lanka since 1986. Its Governing Board now prescribes the denominations and designs of the notes, with the approval of the finance minister.

The bank counts eleven note series since 1950, from a King George VI issue of 1951 to the Development, Prosperity and Sri Lankan Dancers series of 2011. That series runs from Rs.20 to Rs.5000, with development projects on the front and dancers and drummers on the back. De La Rue Lanka prints the notes at Biyagama on paper of pure cotton pulp. A Rs.200 note of 1998 is polymer.

Why cents have left the purse

The first Sri Lankan coin series appeared in 1963, with the emblem of Ceylon in place of the monarch. Coins of Rs.2 and Rs.5 replaced those notes in 1984, and an eleven-lobed Rs.10 followed in 2009. In 2017 the bank issued stainless steel coins of Re.1, Rs.2, Rs.5 and Rs.10, struck by the Kremnica Mint in Slovakia, with diameter and thickness rising step by step so that visually impaired people can tell them apart. A seven-lobed Rs.20 marked the central bank's 70th anniversary in 2020.

The 1c to 50c coins are out of circulation and no longer minted, and cents are rarely seen. Melting, breaking or perforating a coin that is legal tender is an offence under the 2023 Act.