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During a government council organized yesterday, the Moroccan government has adopted bill number 40-17 that grants the central bank an autonomous status. The measure suggested by the Ministry of Economy and Finance, aims to give Bank Al-Maghrib more independence. According to the European Central Bank, such a step, also known as CBI, is meant «to shield (central banks) from short-term political influence when fulfilling their mandate of ensuring price stability».
Indeed, the Moroccan government, through the implementation of the 40-17 bill would facilitate price stability. «It is largely undisputed that an independent central bank with a clearly defined mandate is better able to keep inflation lower and more stable», the same source clarifies.
A long-term project
In fact, in February 2006 Morocco’s lower house has adopted by a majority vote a bill (76-03) regarding amendments to the status of Bank Al-Maghrib. According to an article published by Columbia Business School, the bill «aims to strengthen the autonomy of the Bank in the conduct of monetary policy, as well as the protection of customers of credit institutions, and provides a legal basis for the central bank's mission of monitoring and securing the systems and means of payment». The same source points out that the law includes eight chapters that target the legal and capital status of the bank, its mission, bank operations and tax exemptions among others.
Moreover, in February 2015, Morocco has proposed another draft law that also stresses the independence of the country’s central bank preparing for financial reforms such as floating the currency. Reported by Reuters, the Government General Secretariat stated on its official website that the draft law «bans the central bank from asking for or receiving orders from the government or from someone else», adding that the new procedure will «define criteria for the nomination of the bank's chief and his deputy, and will ban some members of its board from having conflicting positions in the private and public sectors».
CBI, a primordial step
Granting central banks independence is considered as a primordial step towards reform and democracy that was highly suggested by the International Monetary Fund. In a study entitled «Central Bank Independence in North Africa» and conducted by Bessma Momain, a professor in the Department of political sciences at the University of Waterloo, and Samantha St. Amand, a research associate in the Global Economy program at CIGI, it is clearly mentioned that North African countries are more and more open to central bank independence. The survey released in 2014 suggests that CBI is «the best practice in global governance» because it «facilitates price stability, promotes transparency to citizens and provides accountability toward the public good».
Furthemore, the two researchers indicate that granting independence to central banks in North Africa especially in Morocco can guarantee a «balanced long-term economic growth» giving room to a more stable financial market and reducing the likelihood of State-funded financial institution bailouts.
The study does not exclude Morocco as it stresses that implementing the 2006 bill has a positive effect on «transferring independence to its bank», the same source concludes.
The current reform wave comes just a few days after the Central Bank governor; Abdelatif Jouahri declared that the institution would soon announce the date set to start the Moroccan dirham flexibility. A step that was met with mixed reactions.
