LES RESERVES OBLIGATOIRES A TAUX DIFFERENCIES ET MODULATION DE L’OFFRE DE MONNAIE EN ALGERIE (2001-2008)

Abstract

In this article we focus on the reserve requirement as indirect instrument of monetary policy in Algeria. Firstly, we have analysed this instrument under its institutional and practical aspects and value the results of its implementation since 2001.This assessment provides evidence that highlights the need to raise the required reserves ratio from its current level. The paper also addresses the required reserve ratio's role in stabilizing short-term interest rates. The latter's volatility over the period 2001-2006 points to the reserve requirement ratio's ineffectiveness in stabilizing interest rates. The second purpose of the paper is to explore the potential use of different reserve requirement ratios to encourage banks to mobilize time deposits by having them subject to a lower ratio. Another purpose of the policy would be to strengthen the relationship between base money and the money stock. Our results would call for a zero requirement reserve ratio on time deposits, in light of the current structure of the deposit and lending rates.