Historical Sketch

In the early 16th century, the Ottomans conquered the North African coast and established the Regency of Algiers in 1516. By the early 18th century, the regent (Dey) of Algiers had achieved a large amount of independence from the Sultan in Constantinople. In July 1830, France attacked the city of Algiers and forced the Dey into abdication. In 1834, Algeria was formally annexed although the conquest of the hinterland took until 1852. The Saharan region, which was not part of the Dey's Regency, followed until 1902. Resistance was fiercest in the Kabylia region, which already had escaped most of the Regency's control, and an insurgent emirate centred in the city of Mascara existed until 1847. The movement for the Algerian liberation began in the 1920 and turned into open violence at the end of the Second World War. France crushed the uprising, but in 1954 the Algerian war of liberation began which lasted until the Algerian independence in 1962.

Monetary History Overview

Since the early 16th century, Algiers had been part of the Ottoman Empire. Accounting was done in the Algerian Piastre, which was based on Spanish silver coins with their stable weights and fineness. In 1685, the Piastre was equal to the Spanish Dollar, the eight Reals in silver, but during the 17th and 18th centuries its value decreased steadily such that in 1830 the Spanish Dollar was rated at 13½ Piastres. The majority of circulating coins were Spanish and French, supplemented by debased silver and occasional gold coins from the local mint. The modernization of the Algiers mint in the 1820s allowed the production of better-quality silver coins called "Budju", which however came in insufficient numbers to substantially displace the foreign coinage. The French conquest and annexation triggered the introduction of the French accounting beginning of the following year. The former coins of the Regency were tolerated in payments until 1849. In 1851, the privately owned Bank of Algeria obtained a charter including the issuance privilege for paper money. This created the de facto currency of the 1st Algerian Franc since the convertibility of the local notes into metropolitan money was however limited. Nominally the Algerian Franc was identical to the French one. After World War II, local subsidiary coins gradually replace the French coinage. The Bank of Algeria extended the issuing privilege into neighbouring Tunisia in 1904 and was intermittently renamed into Bank of Algeria and Tunisia in 1949, three years after the French state had taken ownership of the bank. After the Tunisian independence of 1958 the bank's name was reverted back. The French currency reform of 1958 was also implemented in Algeria. The notes of the 2nd Algerian (New) Franc circulated alongside the pre-reform notes and only for short time to come. After independence, Algeria began nationalizing the monetary structures. The central bank was established and began operations in January 1963. In April 1964, a currency law was passed creating the Algerian Dinar as national currency. The majority of the currency exchange was executed within one week, low-denomination banknotes and subsidiary coins were replaced until January 1966. The Dinar was created on par with the French Franc and pegged to gold. Algeria did not follow the French devaluation of 1969, but the two currencies remained at fixed parity also after the gold peg had been abandoned in December 1971. The link was severed in January 1974, when Algeria did not follow the Franc devaluation. The economic prosperity of the period rendered the Dinar a stable currency until the outbreak of the civil war in 1988. In the following decade the currency lost about 90% of its value. In the 2000s a longer period of stability set in, until the mid-2010s when the Dinar lost another another third of its value within a couple of years. Since the early 2020s, the currency has stabilized again.

Algeria joined the International Monetary Fund (IMF) on 26.09.1963.

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