Al Jazeera Net correspondents
Algeria- The Algerian authorities licensed the establishment, accreditation, and practice of digital banking activity, according to special conditions set by “Regulation 24-04,” signed by the Governor of the Bank of Algeria on October 13 of last year.
Terms of operation of digital banks
According to Issue No. 77 of the Official Gazette – which Al Jazeera Net viewed – the establishment of digital banks is subject to the same standards as financial institutions – with the exception of the establishment of a digital bank in the form of a branch of a foreign bank – where:
- The law requires that among the shareholders of the digital bank be a bank subject to Algerian law, with experience in the field of online banking services, provided that it owns no less than 30% of the capital, and without this percentage reaching the individual share of each shareholder from others and parties related to them. .
- The law requires the digital bank to open a social headquarters in Algeria for administrative purposes, with the possibility of using it to address customer complaints.
- The digital bank is not allowed to open agencies other than those called “digital,” which operate entirely “automatically,” according to the same system.
- The digital bank is also prohibited from granting loans to large institutions, with the exception of loans owed to small and medium enterprises that have become large institutions.
- The system allows these banks the freedom to practice all operations stipulated in the Monetary and Banking Law, especially receiving funds from the public, loan operations, and banking operations related to Islamic banking, as well as placing all means of payment at the disposal of customers and managing them.
The importance of digital banks for the Algerian economy
Description Monetary policy expert, Omar Haroun, Licensing digital banks is an essential step in the process of developing the banking system, given its impact on paper money transactions and the entire economy.
He explained in a statement to Al Jazeera Net that digital banks encourage the use of electronic payment methods of various types, which makes the demand for paper money at its lowest levels, especially in practices such as purchasing cars and real estate.
Haroun said that the most important characteristic of digital transactions is the ease and ease of obtaining various goods and services quickly, while avoiding the liquidity crisis that often characterizes economies that have not expanded in the field of the digital economy.
He added that digital banks will reduce costs, stressing the need to increase the level of insurance of their operations against fraud.
Digital banks will contribute to developing the knowledge economy and emerging institutions that rely on special financial innovation products, while reviving stock exchange operations that do not accept the purchase and sale of stocks and bonds through liquidity, according to the same spokesman.
Omar Haroun pointed out its positive impact on financing public finances, through the issuance of treasury bonds to cover the budget deficit, which amounted to $62 billion this year.
Parallel market trading
The biggest challenge facing these digital banks remains the proposed mechanisms for transferring parallel market funds, officially estimated at about $90 billion, to official channels, in light of a financial culture that relies heavily on paper money.
He expressed his belief that digital banks will provide more transparency to the local economy, by reducing the flow of funds to the parallel market, and will also contribute to greater mobilization of savings and strengthening the financial governance of the Algerian market.
Haroun pointed out that the number of current bank accounts in Algeria reached 12.5 million, with a balance of about 3,700 billion Algerian dinars (about 28 billion dollars), and if deposits are counted, the amount could reach 7,600 billion dinars (57 billion dollars), and he expected that the system would lead to Digital Finance to double the number of accounts.
For his part, Abdel Rahman Aiya, Director of the Algerian Economic Corporation Development Laboratory at Ibn Khaldun University, said that despite the presence of political will, the bureaucracy that currently characterizes the financial sector in Algeria makes it difficult to facilitate the establishment of digital banks.
Expert Ayya stressed to Al Jazeera Net the need to address the challenge of transferring capital to and from abroad when implementing the digital banking system.
The financial expert stated that the role of digital banks will not be limited to financing goods for import and export, but will go beyond financing feasibility studies, market studies, and financing education costs and other services.
He said that collecting using digital payment tools will inevitably contribute to raising the value of exports outside the hydrocarbon sector.
Algeria’s exports reached $55.6 billion in 2023, while imports reached $42.5 billion, including $4.78 billion service imports.