The Central Bank of Algeria, created in December 1962, was the sole bank of issue at that time. Following the separation of the French and Algerian treasuries in late 1962, the Directorate of Treasury and Credit was established as the government's fiscal agent. The state also established cooperative banks. It wasn't until 1996 that private companies were permitted to set up money-changing shops following a directive issued by the Central Bank initiating open market operations. This opened a field previously restricted to state-owned banks. Bank base interest rates officially fell from 18.5% to 15% during 1996, according to the prime minister, Ahmed Ouyahia. In 1998, local commercial banks cut interest rates on loans to between 10% and 12.5%, down from a range of 18.5% to 23.5% in 1996. The Bank of Algeria's primary method of financial control was to limit lending, and interest rate cuts were aimed at encouraging growth.
Foreign banks ceased operations after the nationalization of banks in 1963 and were absorbed by three government-owned banks including the Foreign Bank of Algeria, the National Bank of Algeria, and the People's Credit of Algeria. There were also four government banks for financing economic development and a savings institution that offered housing loans. These included the Algerian Development Bank, the Agricultural Bank for Rural Development, and the Maghreb Bank for Investment and Commerce.
In 1997, the banking industry of Algeria included one Central Bank (Banque d'Algerie), six state-owned banks, one public development bank and one private bank (Union Bank, concentrating on merchant banking since 1995). In 1998, five new private banks opened, including one US-based bank.
The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $16.0 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $26.9 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 3.35%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 6%.
The Algiers stock exchange was opened in July 1999. With only three companies listed (a food processing company, a pharmaceutical company, and a hotel) the exchange is in its early stages. Bonds issued in 1998 by Sonatrach, the national oil company, were rated in the Algiers stock exchange on 18 October 1999.