The Central Bank of Algeria raised the mandatory reserve ratio for banks from 8 percent to 12 percent, based on the stability of the domestic liquidity after the declines registered in 2015 and 2016, coinciding with the oil price crisis.
This is the third time that the Central Bank of Algeria decides to intervene to adjust the reserves’ ceiling of public and private banks in 18 months, in order to provide the required liquidity within the official channels, namely banks, where it already ordered banks in August 2017, to reduce their reserves from 8% to 4% to inject more liquidity into the financial markets, then it ordered to raise it again to 8% in September 2018.
Algeria has 29 banking institutions, seven of which are public banks and more than 20 foreign banks from the Gulf, in particular, some other French banks and one British bank.
The decision means that 12 per cent of the total client deposits in the Algerian banking sector will remain in reserve with the central bank, without the authority to use it for investment or lending by banks.
Source: (Al-Arabi Al-Jadeed newspaper, Edited)
