To further develop the operational framework for financial stability, and following the implementation in 2010 of the new accounting rules, in line with international standards, as well as those related to the assessment of the risks associated with new financial products, a regulation on the identification, measurement, and management and control of the liquidity risk was enacted by the Council on Money and Credit in May 2011. This regulation introduces a minimum short-term liquidity ratio which must be met by banks and financial institutions at all times. In the same vein, the Council on Money and Credit has also enacted in May 2011 a second regulation establishing an internal surveillance system and a ceiling by counterpart regarding interbank outstanding lending and borrowing, especially those occurring in the money market. The assessment made by the Bank of Algeria for 2013 suggests that all banks meet the liquidity ratio requirements (169.87% at the end of 2013), despite the relative stabilization of banking liquidity over the past year. In terms of banking sector depth, it is worth noting that the ratio of collected resources (demand and term deposits excluding hydrocarbon deposits) to nonhydrocarbon GDP increased in 2012 and 2013 (62.73%) after a stabilization at 61.44% in 2011. The upward trend between 2008 and 2013 of the credit to the private sector as a proportion of private sector deposits in local currency, in a context of increased financial transformation, is another relevant indicator of the banking system depth.

This important and costly bailout program enabled public banks to meet the prudential regulation requirements in terms of solvency ratios and risk-distribution, in line with international standards. With the sustained implementation of the new banking regulatory framework for banks and financial institutions during the 1990s, especially with regard the rules and conditions for the establishment of new banks and financial institutions, the second half of the 1990s recorded the first phase of effective opening of the banking activity to the private sector. However, violations and breaches in some private banks led the Banking Commission – the supervisory authority – to withdraw the licenses of seven banks and two financial institutions between 2003 and 2009, a number of which being in bankruptcy conditions between 2003 and 2006 and having risks concentrated on entities of their group. Against this background, the deposit guarantee scheme was activated in 2003 in accordance with the prevailing regulatory framework. In August 2003 and in light of these failures, the 1990 banking law was revised to strengthen the licensing conditions, increase the minimum capital requirement, which also became fully due in cash, and strengthen the Banking Commission missions. In particular, the Commission was given exclusive competence to exceptionally extend the deadline for the publication of banks and financial institutions’ financial statements. In parallel, the supervisory capacities of the Bank of Algeria have been significantly reinforced since the beginning of the 2000s; Bank of Algeria’s corps of inspectors being legally in charge of implementing the supervisory program set up by the Banking Commission.