Background

This technical assistance project was initiated by the Central bank of Algeria after a World Bank/IMF mission that was conducted in June 2009 to update the analysis and recommendations made within the framework of an FSAP in 2003. The mission made a number of recommendations, some of which are directly linked to the proposed project.  This project aims to provide a tool for Algerian authorities to test their existing laws, policies and procedures to deal with a systemic problem and  to assist the three regulatory agencies (the Ministry of Finance, the Central bank, the Capital Market Authority and the Supervisory Body for Insurance Companies) to formalize their collaboration and communication strategies especially in times of distress or crises.

Project

The GOAL of this project is to (i) test the response of the regulatory agencies to the emergence of serious problems in one or more financial institutions,  including the failure of a systemic bank; (ii) test intra- and inter-agency coordination by the authorities in such a situation, including information sharing, analysis, decision-making and communications; and (iii) ascertain the adequacy of existing laws, regulations, policies and procedures for dealing with such situations and provide recommendations.

The PURPOSE is to provide a tool-kit for Algerian supervisory agencies to test and enhance their capabilities to efficiently manage financial distress and potential systemic crisis through the conduct of an initial crisis simulation exercise.

OUTPUTS:  The outputs of the project are: (i) preparation and delivery of a roughly six-hour, multi-stage, simulation exercise during the course of a single day; (ii) delivery of a written report to the authorities summarizing the results of the simulation; (iii) an action plan to improve the structure of their existing regulatory system as well as to correct the weaknesses in communication and coordination among agencies; and (iii) a dissemination seminar to review the report with the authorities.

Project LIFE TIME is 6 months from October 2009 till March 2010.

Project BUDGET is $167,000.

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