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Assessment of Algeria’s Compliance with Basel Core Principles

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This report from the International Monetary Fund (IMF) assesses Algeria’s compliance with the Basel Core Principles for Effective Banking Supervision. The assessment was conducted in November 1999 and covered several areas, including preconditions for effective banking supervision, licensing and structure, prudential regulations and requirements, methods of ongoing supervision, information requirements, formal powers of supervisors, and cross-border banking.

Key Findings

Here are some key findings from the report:

Preconditions for Effective Banking Supervision

  • Algeria’s public and market infrastructure is weak, which hinders effective banking supervision. The authorities need to amend laws and regulations to improve this situation.

Licensing and Structure

  • While Algerian banks comply with most of the Basel Core Principles in this group, there is a need to strengthen licensing procedures to avoid creating new banks with unclear business plans or management skills that could quickly fail and damage public confidence.

Prudential Regulations and Requirements

  • Nine out of ten principles in this group are non-compliant. The authorities have made efforts to issue new regulations but need to enforce compliance with these rules, including adopting the Financial Action Task Force (FATF) principles on money laundering.

Methods of Ongoing Supervision

  • Algeria does not comply with most of the Basel Core Principles in this category. However, steps are being taken to improve off-site and on-site supervisions through an intensive IMF technical assistance program.

Information Requirements

  • The reporting process of Algerian banks could be improved by developing coordination with external auditors who should inform the supervisory authority immediately if they detect any material matters affecting the bank concerned.

Formal Powers of Supervisors

  • Algeria is largely compliant with this principle, but additional measures should be taken to avoid supervisory forbearance.

Cross-Border Banking

  • Algeria is not compliant with this group of principles, but for now this is not a priority.

Conclusion

The IMF report provides a comprehensive assessment of Algeria’s compliance with the Basel Core Principles and identifies areas where improvements are needed to strengthen banking supervision in the country.