The missions of the Central Bank

Supervision of the Moroccan banking system

By law, the banking system is placed under the control of Bank Al-Maghrib. The interests of customers are thus preserved in all banking institutions, and the stability of the Moroccan financial system assured.

The practice of the banking activity is subject to obtaining a licensing given by the Governor of Bank Al-Maghrib, following a procedure verifying the moral character and competence of future managers and the financial capacity of shareholders.

Bank Al-Maghrib lays down laws and regulations for licensed institutions, enacts management and accounting rules, and defines financial ratios - in particular solvency and liquidity ratios. These standards aim at financial transparency and ensure risk prevention.

The monitoring carried out by Bank Al-Maghrib is permanent, through the analysis and control of accounting and financial documents transmitted regularly by credit institutions. On-site inspections supplement this system on an ad-hoc basis.

It is also the responsibility of Bank Al-Maghrib to deal with the claims of any person who considers himself to be prejudiced by a credit institution.


Determining the key rate

Any bank or financial institution licensed by Bank Al-Maghrib holds an account with the Central Bank. Operations between these institutions are carried out through this account. In this context, Bank Al-Maghrib, like any central bank, sets the key rate. This is the main rate at which banks are refinanced by the central bank.

A bank facing a need for liquidity may go to other banks or, ultimately, to the central bank.
Changes in the key rate set by Bank Al-Maghrib are passed on by banks, which apply the fee that allows them to finance the economy. The key rate thus indirectly influences interest rates that will be offered to customers by commercial banks.

Bank Al-Maghrib and monetary policy

The central bank is responsible for ensuring price stability, which guarantees the economic growth of the country.

To achieve this objective, Bank Al-Maghrib defines and implements the monetary policy of Morocco. A price rise that is low and steady over time is in part a function of the money supply1, consisting of coins and notes in circulation and deposits in banks.

The central bank holds various instruments enabling it to control the money supply2. They are mainly of three types:

  • The interbank market: Bank Al-Maghrib intervenes through temporary sales of securities, by purchases or sales of assets, or by exchanges of foreign currency.
  •  Standing facilities: these may include overnight credit facilities provided to Moroccan banks, or deposit facilities enabling them to invest their surplus liquidity with Bank Al-Maghrib


Bank Al-Maghrib, in the service of the Moroccan State

The Central Bank is not only the banker but also the financial agent of the Treasury for its operations both in Morocco and abroad.

It is responsible for the issuance, conversion and repayment of government bonds and, in general, the financial service for loans issued by the State. It may also participate in the negotiation of external loans and borrowing on behalf of the State. Bank Al-Maghrib serves as financial advisor to the government.

The Central Bank, on the other hand, cannot grant financial assistance to the State, nor can it guarantee its commitments, except in the form of a cash facility. Bank Al-Maghrib may not grant financial assistance to businesses or public bodies or guarantee any of their commitments.

Finally, Bank Al-Maghrib prepares and publishes Morocco's monetary and financial reports and statistics.


Bank Al-Maghrib and the management of foreign exchange reserves

The Central Bank determines the exchange rates between the Dirham and foreign currencies.

The listing of the Dirham, both in relation to the Euro and the Dollar, has an impact on foreign trade and tourism, and hence on the country’s balance of payments.

In order to regulate these exchange rates4, Bank Al-Maghrib holds and manages foreign exchange reserves. Their importance maintains the confidence of the financial markets in the national currency, and more generally in the economy of the country. They are an indispensable instrument of foreign exchange policy, since the sale or purchase of these reserves on the international market has a direct effect on the value of the Dirham and on its exchange rate5.

Except for gold, foreign exchange reserves include foreign banknotes and, more generally, any payment instrument denominated in foreign currency used in international transfers (e.g. foreign trade or tourism). Foreign currency assets and bills of exchange are the second component. The third consists of bonds or securities issued by foreign states, central banks, international institutions, or by foreign financial institutions.


Bank Al-Maghrib, the issuance right

Bank Al-Maghrib, also known as the “Issuing Institution”, exercises the right of issuing banknotes and coins having legal tender on the territory of the Kingdom.

For the fulfillment of this fundamental mission, Bank Al-Maghrib created Dar As-Sikkah in 1987, to whom it entrusted responsibility for the design, production and issuance of national banknotes and coins, as well as the supply of its network of branches which, in turn, provide currency to banking institutions and public accountants.

The putting into circulation of a new type of banknotes or coins is decided upon by Bank Al-Maghrib. The names, formats, colors and all other characteristics are its responsibility. The central bank is also solely competent to assess and maintain the quality of banknotes and coins in circulation.

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