Maintaining Financial Stability in Algeria: A Central Banker’s Perspective

Monetary Policy and Financial Stability

The Bank of Algeria has successfully maintained price stability and preserved financial stability despite structural excess liquidity in the money market. This achievement is a testament to the bank’s commitment to prudent monetary policy and its ability to navigate complex economic challenges.

Fiscal Capacity and Economic Growth

• The government has built a significant fiscal capacity, accounting for 34% of GDP at the end of 2013.
• This strong fiscal position has enabled the government to mitigate the impact of external shocks without crowding out private sector credit.

Credit Expansion and Private Sector Growth

• Credit expansion in Algeria continued at a high rate in 2013, driven by medium and long-term credit dynamics.
• The credit growth rate for the private sector averaged 19.4% over the last thirteen years, indicating a strong growth trend.

Banking System Depth and Solvency Ratios

• The ratio of collected resources to non-hydrocarbon GDP increased in 2012 and 2013, indicating an improvement in banking system depth.
• Banks have consolidated their financial soundness indicators, with solvency ratios remaining high and above the recommended level under Basel III.

Regulatory Framework and Risk Management

• The Bank of Algeria has intensified micro-prudential controls, including anti-money laundering and financing of terrorism mechanisms.
• The bank has strengthened macro-prudential tools to assess banking sector risk and ensure stability.

Payment Systems Infrastructure and International Standards

• The Bank of Algeria is updating its payment systems infrastructure to meet international standards, enhancing the efficiency and security of financial transactions.