Selected Issues Papers

Enhancing Monetary Policy Transmission in Algeria

By Gian Plebani, William Gbohoui

October 3, 2025

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Format: Chicago

Gian Plebani, and William Gbohoui. "Enhancing Monetary Policy Transmission in Algeria", Selected Issues Papers 2025, 131 (2025), accessed October 4, 2025, https://doi.org/10.5089/9798229026376.018

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Summary

Algeria is actively pursuing reforms to modernize its monetary policy framework, with a focus on enhancing the role of interest rates in achieving price stability. The new monetary and banking law provides the necessary operational and organization tools while the authorities are improving the capacity in macroeconomic forecasting. This paper analyses the monetary policy transmission in Algeria. The results suggest that the interest rate channel is relatively weak as the BA focuses on liquidity operations. A focus on interest rate tools, financial sector reform and central bank independence would help to improve monetary policy transmission in Algeria.

Subject: Asset and liability management, Central bank policy rate, Central Banks, Credit, Discount rates, Financial services, Inflation, Interbank rates, Liquidity, Liquidity management, Market interest rates, Monetary policy, Monetary policy frameworks, Money, Open market operations, Prices

Keywords: Algeria, Central bank policy rate, Credit, Discount rates, Impediments of transmission, Inflation, Interbank rates, Interest rate tools, Liquidity, Liquidity, Liquidity management, Market interest rates, Monetary aggregates, Monetary policy framework, Monetary policy frameworks, Monetary policy transmission, Nominal effective exchange rate, Open market operations, Structural VAR

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