Adapting the Regulatory Relationship Between Islamic Banks and the Central Bank : A Comparative Study of International Models and the Algerian Model under Monetary and Banking Law 23-09

Abstract

The relationship between monetary authorities and Islamic financial institutions represents a complex challenge in modern finance, particularly after the 2008 global financial crisis highlighted the structural vulnerabilities of conventional, debt-based systems. As Islamic banking gains prominence due to its link to the real economy, central banks globally are compelled to adapt their regulatory frameworks. This study addresses the core problem of "regulatory adaptation" (takyeef tanzeemi), defined as the process of reforming monetary policy tools and prudential standards to align with the Sharia-based, asset-linked nature of Islamic banks. The research employs a comparative methodology, first analyzing successful international models, specifically the dual banking system of Malaysia and the approaches of Gulf Cooperation Council (GCC) countries, to identify best practices in legal recognition, liquidity management, and risk regulation. It then conducts an in-depth analysis of the Algerian experience under the new Monetary and Banking Law 23-09. The study evaluates whether this law represents a genuine paradigm shift from treating Islamic banks as exceptions to integrating their specificities into the core of the monetary order. The central finding concludes that while Law 23-09 marks a crucial and positive step toward formalizing the regulatory relationship, its ultimate success in enhancing financial stability depends on the development (supporting) Sharia-compliant monetary policy instruments and the (deepening) of prudential frameworks tailored to Islamic contracts. The research provides recommendations for strengthening the resilience and integration of the Algerian Islamic finance sector.