Virtual banking is an “elusive” dream in Algeria

Algeria does not appear to have taken a clear stand on the issue of virtual banks, despite the reforms it has undertaken at the level of various sectors and fields, which has paved the way for tug of war. Social networking sites and the media and academic space were the scene for them, necessitating government intervention.

Startups delegate in charge of startups, Yassine Walid, denied that news had spread about the ban on virtual banks’ activities in Algeria. He said: “I assure you that the government has not taken any action in this direction,” adding that “on the contrary, there are major efforts to modernize the banking and banking sector and facilitate the export of digital services.”

Walid explained that after extensive consultations with the Central Bank, within the framework of the government’s action plan, the Bank of Algeria will begin reviewing the monetary and exchange rate laws to include electronic payment intermediaries.

The minister’s statements show that the government is experiencing terrible pressure on issues of virtual banks, cryptocurrencies and electronic transactions, especially with the expansion of Algerians’ dealings with external parties regarding e-commerce and money transfer.

State interest … but

The Minister Delegate in charge of Startups stated in November (November) 2021 that the government is seeking to include an amendment that would allow the establishment of virtual banks in Algeria. He said these banks would provide traditional banking services, such as issuing debit cards and opening bank accounts, but via the line and without the need to stand in queues. He added that the new amendments, which will be included in the Monetary and Exchange Rate Act, allow the activity of payment service providers to appear.

The Prime Minister, Ayman bin Abdul Rahman, also announced earlier that the amendments would affect monetary legislation, including the inclusion of governance principles in the management of banks and financial institutions, and licensing of payment service providers to introduce the national payment. . system as an “independent shareholder” in order to promote the digital economy. He pointed out that “the government is betting on the integration of innovative beginners into the virtual banking plan.”

No virtual banks coming soon

In the same context, Professor of Economics Ahmed Al-Haidousi believes that the reform of the banking system and its modernization through payment technologies does not necessarily mean the establishment of virtual banks, because virtual banks have a different meaning, and this contradicts the philosophy of the Central Bank. Bank of Algeria.

Regarding the civil servant’s statements, Al-Haydosi said in a statement to “The Independent Arabia” that the minister did not explain well, and he was confused about the matter. He may want to modernize the banking sector by introducing modern payment methods, explaining that the shift to virtual banks, which do not physically exist on the ground. On the contrary, in the virtual world, it first requires the change of monetary and lending legislation and the existence of a qualified human framework for monitoring and supervising these types of banks, as well as preparing strong technological capabilities.

Al-Haydosi said the government would be able to set up virtual banks in the short and medium term, “but in the future there will certainly be virtual banks in Algeria as they are more competitive,” adding that traditional banks in Algeria have become expensive and does not cover all parts of the country, unlike virtual banks which It can provide better and faster service at lower cost.

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Very complex problems

The specialists unanimously agree that the transition from traditional financial transactions to digital transactions and electronic payment must go through certain stages, and the beginning is to change the legal system that controls the financial and economic performance of banking institutions, and to generalize electronic payment, because it is not possible to create virtual banks without working To popularize electronic payment, and in general to provide a digital environment prepared for digital financial transactions.

Algerian banks are still experiencing very complex problems that occur during the provision of services, which are represented in the lack of experience, efficiency and poor speed in performance. There is a lack of sufficient awareness among customers, and therefore Algerian banks need to seek accelerated steps . to develop the quality of services so that it can rise to the level of challenges for the banking business.

fears of dangers

A study by the Arab Monetary Fund revealed that Algeria is still among the Arab countries that have no project to launch digital currencies or even initiatives to explore this possibility, compared to other countries, despite the fact that the Bank of Algeria has all the requirements. for this, especially in terms of legislation and regulations on privacy Data protection and robust frameworks for cyber resilience and payment system regulations, which comply with international standards.

The study attributed the position of refusal to concerns about the risks of hampering the transfer of the impact of monetary policy, competition with bank deposits and the undermining of bank mediation, as well as the transition from bank deposits to digital currencies issued by central banks during banking crises, in addition to the existence of risks in the field of cyber security and data loss or leakage and outsourcing.

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