Islamic Banking in Algeria: Legal Framework and Development Prospects

Abstract

Islamic banking finance represents one of the most prominent modern financial mechanisms that has proven its efficiency in promoting financial stability and diversifying sources of funding within a framework consistent with the principles of Islamic law (Sharia). Algeria adopted this model through Monetary and Credit Law No. 90-10, which authorized the establishment of Islamic banking institutions and the opening of Islamic finance windows within conventional banks. Subsequently, Regulation No. 20-02 of 2020 provided the operational framework governing Islamic banking activities, setting out the procedures and conditions for their implementation. This framework was further reinforced by Law No. 23-09 of 21 June 2023 on the Monetary and Banking Law, which expanded Islamic financing instruments and strengthened the powers of the Money and Credit Council in terms of authorization and supervision.

This study aims to analyze the legal and regulatory framework governing Islamic banking finance in Algeria and to assess its effectiveness in achieving its objectives, while exploring prospects for its development in line with national economic requirements and relevant international standards.