During a meeting chaired by Lakhdar Salmi, chairman of the commission, in the presence of the Minister for Relations with Parliament, Basma Azouar, Mr. Kassali specified that this text of the law repealing Ordinance No. 03-11 of 26 August 2003 relating to money and credit, amended and supplemented, is part of “the reforms initiated by the public authorities and the restructuring of the monetary and financial system in Algeria, in order to adapt to the latest developments and to better meet the requirements of the expected economic reform”.
This reform would strengthen the performance of economic enterprises and encourage foreign investment, which requires facilitation in terms of capital transfer.
“This profound revision” tends to strengthen the governance and transparency of the banking system, led by the Bank of Algeria, by giving the Council of Money and Credit (CMC) new prerogatives allowing it to support the transformations experienced the banking ecosystem, by extending its prerogatives in terms of licensing investment banks, digital banks, payment service providers and independent brokers, by authorizing the opening of foreign exchange offices and by strengthening the role of the Banking Commission as a supervisory authority and as a judicial and administrative body, adds the Minister.
The establishment of a new legal framework governing the activity of money and credit, pursuant to the program of the President of the Republic, Mr. Abdelmadjid Tebboune, aimed to adapt the development of the banking environment to the economic transition , financial and technological that Algeria knows, and to face the current challenges, recalled Mr. Kassali.
Evolution of laws governing banking activity in Algeria
In this context, the Minister referred to the different stages of evolution of the laws governing banking activity in Algeria, which, he said, have undergone several modifications since the beginning of the 1990s, to respond to economic and country’s finances.
Law N 12-86 of August 19, 1986 allowed the establishment of rules aimed at supervising banking activity, particularly in terms of credit.
Law 10-90 of April 14, 1990, which repealed the 1986 law, enshrined the independence of the Bank of Algeria (BA) and introduced banking systems that comply with the rules of the economy of market.
Subsequently, Law 10-90 was updated by virtue of Ordinance N 03-11 of August 26, 2003 relating to money and credit, to strengthen the conditions for the creation and control of banks and financial institutions. and put in place more precise control, information and alert mechanisms.
The provisions of the new bill will enable institutions to strengthen their organizational and control missions, to comply with the practices of central banks and control institutions at the international level, and to consolidate the process of economic recovery, through the strengthening of financial inclusion, the diversification of the sources of financing of the economy and the development of the financial market, added the Minister.
At the end of the Minister’s presentation, the members of the committee began the debate on these provisions.
Main Amendments to the Currency and Credit Bill
Here are the main amendments provided for in the new bill on currency and credit repealing Ordinance No. 03-11 of August 26, 2003 relating to currency and credit, and presented on Thursday by the Minister of Finance, Brahim Djamel Kassali before the Finance and Budget Commission of the National People’s Assembly (APN).
1- Strengthen the governance and prerogatives of the Bank of Algeria (BA), the Money and Credit Council, the Banking Commission, banks and financial institutions through:
– The return to the mandate system (04 years) for the exercise of the function of governor of the Bank of Algeria and vice-governors, renewable only once (01), which will confer more credibility, will achieve stability in the management and greater independence of the Bank of Algeria in the accomplishment of its missions (article 13).
– Introduce new mechanisms in monetary policy, with the possibility of adapting them to the specificities of banking operations, in particular Islamic finance and green finance, provisions that are able to guarantee greater effectiveness of monetary policy and improve its transition (articles 42 and 43).
– Reorganize the component of the Board of Directors of the Bank of Algeria and the Currency and Credit Council, through the expansion of its component and the prerogatives of the Currency and Credit Council, to enable it to supporting changes in the banking ecosystem. Its prerogatives are extended to the approval of investment banks, digital banks, payment service providers and independent intermediaries. It will be authorized to open exchange offices (articles 63 and 89).
– Establish a legal framework for the exercise of the activity relating to Islamic finance, which enshrines, in particular, the possibility of approving banks and financial institutions carrying out exclusively operations related to Islamic finance (Articles 70, 71 and 72).
– This law makes the Banking Commission the only supervisory authority empowered to rule on violations of the provisions of this law and its clauses, with regard to exposure to risks, in particular credit risk and acts of resulting management (Articles 115 and 119).
– The decisions of the banking commission can only be appealed before the Administrative Court of Appeal of the wilaya of Algiers within the time limits set by the provisions of the code of civil and administrative procedure (article 118).
– Strengthen the monitoring and control mechanisms, in particular by creating new committees such as that of financial stability (article 156), which will be responsible for macro-prudential control and crisis management, in addition to the national payment committees , whose main mission is to draw up the draft national strategy for the development of cashless means of payment, with the aim of strengthening banking transactions and financial inclusion (article 162).
2- Take into account the repercussions of technological development on the banking sector, through:
– Introduce the digital currency of the Central Bank (Article 02), called “Algerian digital dinar”, which is developed, put into circulation, managed and controlled by the Bank of Algeria, which will ultimately constitute support for the material form of fiat currency.
– Consecrate and supervise the dematerialization of exchanges with banks, financial institutions and payment service providers (article 37).
– Extend the mission of the Bank of Algeria in terms of security and control of payment systems to cover the clearing system, settlement and financial instruments (article 57).
– Article 63 of the bill provides for the creation of digital banks and bodies called “Payment Service Providers (PSP)”, which can take the form of a joint stock company (SPA), a by simplified shares (SAS) or a limited liability company (SARL) (article 90).
– Reinforce access to credit information through the membership of other credit authorities, not subject to the supervision of the Bank of Algeria, to the Central Risk Office (article 109).
– Adapt certain provisions to those provided for in the finance laws relating to the banking sector, namely the abolition of rule 49/51, qualitative action (right of representation of the State in the social bodies of banks with private capital) and the right of first refusal.