Assessment Report: Algeria’s Compliance with Basel Core Principles on Effective Banking Supervision

Introduction

In November 1999, an assessment report was conducted to evaluate Algeria’s compliance with the Basel Core Principles on Effective Banking Supervision. This report provides a comprehensive analysis of Algeria’s regulatory framework and identifies areas for improvement.

Assessment Findings

Regulatory Framework

Algeria has made significant progress in establishing a regulatory framework, but there are still areas that need improvement.

• Progress: Algeria has implemented a new banking law that has improved the regulatory framework.
• Weaknesses: The public and market infrastructure require amendments to laws and regulations.

Licensing and Structure Principles

The majority of the licensing and structure principles (CPs 2-5) are essentially in compliance, but strengthening licensing procedures is essential.

• Compliance: CPs 2-5 are largely compliant with international standards.
• Recommendations:
  • Develop the capacity to enforce existing regulations efficiently.
  • Apply licensing procedures more stringently.

Prudential Regulation and Requirements

There are significant gaps in prudential regulation and requirements (CPs 6-15), with nine out of ten principles being noncompliant.

• Noncompliance: CPs 6-15 require improvement to ensure compliance with international standards.
• Recommendations:
  • Improve prudential reporting and information collection.
  • Adopt Financial Action Task Force (FATF) principles on money laundering.

Methods of Ongoing Supervision

Algeria does not comply with most of the methods of ongoing supervision principles (CPs 16-20).

• Noncompliance: CPs 16-20 require improvement to ensure effective ongoing supervision.
• Recommendations:
  • Develop a reliable system for monitoring bank activities.
  • Implement regular inspections and examinations.

Response of the Authorities

The authorities have expressed a desire to improve the situation, and an intensive program of technical assistance has been embarked upon to develop supervisory capacity.

• Commitment: The Algerian government is committed to improving banking supervision.
• Technical Assistance: An intensive program of technical assistance has been implemented to support the development of supervisory capacity.

Summary of Assessment Findings

This report highlights areas for improvement in Algeria’s banking supervision and provides recommendations for addressing these issues. By implementing these recommendations, Algeria can ensure a more robust and effective regulatory framework that supports the stability and soundness of its financial system.