## 1marea2022002 ## Source details **Canonical URL:** [1marea2022002](https://www.imf.org/-/media/files/publications/cr/2022/english/1marea2022002.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2022/english/1marea2022002.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2022/english/1marea2022002.pdf.json) --- ### Overview and Context - Bank Al‑Maghrib (BAM) has implemented expanded and comprehensive transparency practices related to price stability and financial stability. - Public commitment to transparency anchored in the 2019 BAM Law and quinquennial plan 2019-2023. - Recent communications use digital channels, website, video, social media; financial education platforms developed. - Mission recommendation: adopt a specific communications strategy to coordinate priorities, timeframes, and targeted actions. - Review scope and timing: - CBT review conducted at BAM’s request; fifth under the CBT pilot program. - Mission conducted March 23–April 8, 2022. - Cross-Border Financial Flows and Foreign Exchange Administration removed from scope (Office des Changes responsible). - Review maps BAM’s transparency choices against CBT best practices (governance; policies; operations; outcomes; official relations). ### Key Macroeconomic and Policy Context - COVID-19 and recovery: - GDP is forecasted to grow by 6.3 percent in 2021. - BAM lowered policy rate by 75 bps to 1.5 percent in 2020 and kept it unchanged throughout 2021. - Required reserve ratio brought down to zero in response to COVID-19. - BAM drew upon the IMF’s precautionary and liquidity line (PLL) on April 7, providing an additional 3 billion U.S. dollars in foreign exchange reserves. - Exchange rate and IT transition: - MoF widened fluctuation band from +/- 0.3 percent to +/- 2.5 percent (basket weights: 60 and 40 percent for the euro and the US dollar). - On March 9, 2020, fluctuation band widened from ±2.5 percent to ±5 percent (second phase). - BAM operates a mid-corridor interest rate system with open market operations, standing facilities, and reserve requirements. - BAM undertook two rounds of macro stress tests in 2020 with IMF TA; results showed overall resilience of banks. ### Transparency in Governance, Risk Management, and Accountability - Legal framework and mandate: - Law No. 40-17 (BAM Law) published; Chapter II lists missions (Article 6: ensure price stability). - Recommendation: distinctively describe functions in addition to objectives; clarify functions vs objectives on website. - Governance disclosures and institutional autonomy: - Organizational chart, Governance Charter, Rules of Procedure, CVs/biographies of Board members published. - Article 13: prohibition on seeking/accepting instructions; Article 1: financial and administrative autonomy; director of Treasury is non-voting Board member. - Gaps: judicial review limits, dismissal grounds, remuneration/indemnity amounts and tenure details for appointed Council members not clearly disclosed. - Recommendation: publish draft regulations/circulars, explain legal nature and judicial review limits, disclose remuneration mechanism or amounts. - Risk management: - Global Risk Management Policy (GRMP) published; Annual Report discusses strategic, operational, reputational, financial risks. - Gaps/recommendations: - Publish a risk statement and information on developments of key risks. - Provide a high-level overview mapping key risks to BAM’s mandate and mitigation measures. - Publish composition, powers, roles, responsibilities of Risk and Compliance Committee and Internal Coordination and Management Committee and their interaction with the Audit Committee. - Disclose crisis management and business continuity arrangements. - Internal and external audit: - External audit: independent external audit firm applied Moroccan professional auditing standards aligned with ISA; audit usually completed within three months after financial year end. - Board appoints external auditor for fixed non-renewable term; external audit report submitted within five months of financial year end (Article 43). - Recommendation: disclose commitment to independent external audit and publication practices and deadlines for audited financial statements. - Internal Audit: Internal Audit Charter published; QAIP details and external assessments discussed in Annual Reports—recommend highlighting QAIP details on website. - Anti-corruption and codes of conduct: - Board and staff codes published (French); Anti‑Bribery Policy published; ISO 37001 certified (November 2019). - Whistleblowing mechanism published and permits anonymous alerts. - Recommendation: disclose rules for accessing confidential information. - Confidentiality and access to information: - Confidentiality established in BAM Statute Article 39 and Law 31-13 on Right to Access Information. - Law No. 31-13 exclusions include information detrimental to monetary, financial, or economic policy of the State (article 7). - Recommendation: publish confidentiality policy, classification practices, link to Law 31-13, and statistics on information requests (number answered, number refused, average processing time) where legally permissible. - Human capital and communications: - Disclosures: staff numbers, gender split, average tenure, CSR policy, careers portal. - Communications tools comprehensive: website, social media (Twitter, LinkedIn, Facebook, YouTube, Instagram), educational website, press conferences, MPR. - Recommendations: publish a transparent communications policy anchored in law and BAM values; disclose Communications Department functions and response timeframes; provide simplified technical material for public. ### Monetary Policy, Operations, and Supporting Analysis - Monetary policy transparency: - Objectives and framework disclosed; progress toward inflation targeting explained. - Policy decisions: press release, Monetary Policy Report (MPR), and Governor press conference on Board meeting day. - Forecasts: eight-quarter horizon; central model is semi-structural New-Keynesian; methods documented; fan charts and balance of risks published. - Recommendation: consider publishing minutes of Board meetings or summaries of main discussions/debates supporting decisions. - Monetary operations: - Operational framework and instruments fully disclosed (Governor’s decision N° 80/W/20; circular LC/BKAM/2020/8). - Instruments listed include weekly auctions, fine-tuning operations, standing facilities, long-term operations, structural operations; reserve requirement role disclosed. - Counterparty eligibility, accepted collateral, haircuts and categories of counterparties published. - Operational data and accountability: - Daily publication of operational target (overnight weighted average rate), auction results, aggregate bank balances, reserve requirement fulfillment and autonomous liquidity factors. - Governor heard by Parliament’s finance committee; presentations published. ### Exchange Rate Policy, FX Interventions, and FX Reserves Management - Institutional framework: - Multiple agencies involved: MoF, Office des Changes, and BAM; public confusion over respective roles exists. - BAM implements exchange rate policy defined by Government and provides advisory role (Article 11). - Recommendation: add a website section dedicated to design and implementation of foreign exchange policy; explain BAM’s advisory role and disclose key elements of annual letter to Minister of Economy and Finance where feasible. - FX interventions: - FXI operational framework and instruments disclosed (Governor’s Decision D.N.01/W/18; Circular LC/BKAM/2018/1); main instrument: FX auctions; results disclosed timely. - Press Releases sometimes precede auctions (example: September 17, 2021 for September 20, 2021 intervention). - Recommendations: - Disclose the role of the Monetary and Financial Committee (MFC) in monitoring FX market and approving FXI budget. - Disclose purpose of each FX instrument (OTC, auction, etc.) and distinguish BAM discretionary FXI from FX operations for the Government once confidentiality lifted. - FX reserves management: - Article 12: management of FX reserves is a fundamental mission; 2020 Annual Report discloses objectives (security, liquidity, performance), governance, portfolio classifications, risk categories, average rating, portfolio duration. - Gaps/recommendations: - Annual foreign exchange investment policy, investment constraints, eligibility criteria, concentration rules, and methods for investment and risk decisions not published. - Consider creating a specific FX Reserves Management section on website. - Disclose methods to determine portfolio tranche sizes, processes for assessing risk-return performance, rationale and economic analysis for reserve adequacy, and analytical frameworks used for reserve adequacy computations. - Publish advanced risk exposure metrics and applied methods for investment and risk decisions (to be included in 2021 annual report per BAM response). ### Macroprudential Policy, Financial Stability, and Stress Testing - Macroprudential framework and monitoring: - CCSRS is main public source for surveillance; CCSRS meets semi-annually and issues press releases; BAM publishes annual Financial Stability Report (FSR). - FSR discloses macroprudential tool design details and stress testing outputs (top-down, interbank contagion, bank-insurance contagion). - Recommendations: - Publish more details on stress-testing models, assumptions, results, and policy use. - Publish minutes or summaries of CCSRS deliberations (redacted if necessary) or at least main discussions and debates; consider ex-post evaluations of policy actions. - Institute a customary public consultation process (with published proceedings) prior to implementing new macroprudential tools or major design changes—subject to further analysis of legal and procedural constraints. - Stress testing: - FSR discloses types of institutions covered, risks, baseline and adverse scenarios, GaR/SVAR models, time horizon, evolution of non-performing loans and capital positions. - Coverage: eight largest banks, covering almost 80 percent of total banking sector assets (2020). - Gaps/recommendations: - Disclose whether exercise is top-down only or includes bottom-up components and names of institutions covered. - Publish details on satellite models, credit-risk model, liquidity stress test assumptions and results, and how adverse results influence policy. - Consider publishing a comprehensive policy note or working paper on stress-testing exercise. ### Emergency Liquidity Assistance (ELA) - Legal framework: - Article 67 establishes discretionary ELA: may be granted to credit institutions with temporary liquidity problems not raising creditworthiness concerns; if doubts about creditworthiness, ELA only with Treasury guarantee. - A draft Instruction to implement Article 67 drawn up; decree on State guarantee conditions being finalized. - Transparency status and recommendations: - Operational modalities being prepared by BAM and the Treasury. - Recommendation: disclose operational modalities for ELA activation and ex-post disclosure policy for ELA operations while preserving necessary confidentiality. - Current assessment: ELA internal Instruction exists but is not published; ELA has not been activated since 2013 framework or 2019 BAM Law. ### Financial Integrity (AML/CFT), Consumer Protection, and Official Relations - AML/CFT supervisory role: - BAM is designated AML/CFT supervisor for banks and other financial entities under Law No. 43-05 and Law No. 103-12; discloses general supervisory powers, policies, processes, and internal control framework. - Findings and gaps: - Public disclosures include organizational chart, supervisory processes, and some statistics on supervisory missions. - BAM does not publish outcomes of its internal AML/CFT controls (internal reports shared internally only). - Recommendation: publish more detailed information on internal AML/CFT control activities (including completion rates), publish outcomes annually (annual AML/CFT compliance report), and disclose whether independent audits of AML/CFT internal control policies are performed and their results. - Disclosure of some statistical data restricted by Law No. 43-05 and Law No. 22-01. - Consumer protection and financial education: - Legal framework: Law n°103-12 and Law n°31-08; BAM has grievance transfer mechanism to the Moroccan Mediation Center (CMMB) and is a founding member. - Consumer protection activities: regulatory texts, thematic on-site inspections since 2016, complaint procedures, pedagogical guides, and FMEF financial education initiatives. - Recommendations: - Add a consumer protection tab on BAM website and disclose the arrangement with the Mediation Center and FMEF, including goals, roles, and measures of effectiveness and satisfaction. - Official relations and inter-agency cooperation: - CCSRS comprises ACAPS, AMMC, MoF and is chaired by BAM; Article 111 provides for exchange of information among committee members. - Findings/gaps: - Memoranda of Understanding and cooperation agreements generally not published. - Recommendation: publish agreements where possible, explain advisory role with MoF (particularly re: FX policy), clarify allocation of roles among BAM, MoF, and Office des Changes, and expand disclosure of international cooperation (texts of MoUs, press releases) in a dedicated website section. ### Mission Findings, Key Recommendations and BAM Response (selected) - Eleven key recommendations across five pillars; actions classified as "Immediate implementation" or "Implementation subject to further analysis." - Selected implemented or in‑progress actions reported by BAM: - Published selection and independence criteria of external auditor and auditing standards under “Supervisory bodies”; committed to post financial statements on website no later than May 31 following fiscal year. - Published composition, roles and responsibilities of committees in organizational chart; risk management process described on website. - A global communications policy being finalized; BAM to set guidelines to improve turnaround times for media inquiries. - Internal AML/CFT activity subject to independent internal auditing; plans to present detailed AML/CFT developments in 2021 Annual Report; an internal report with qualitative and quantitative AML/CFT indicators referenced on website. - Explanatory content on exchange regime history and reform published; BAM will display its advisory role on website. - ELA framework briefly described on financial stability section; revised ELA framework to be completed after decree on State guarantee finalized; more methodological detail to be included in FSR July 2022. - FX reserves methods and applied decision methods to be disclosed in 2021 Annual Report; creation of dedicated FX Reserves Management website section under examination. - Publication of CCSRS redacted minutes to be examined via benchmark analysis and Moroccan specificities; ex-post evaluations of macroprudential tools to follow activation. - BAM integrated recommendations into strategic roadmap and will monitor implementation via a dedicated governance body. ### Timing, Data and Publication Practices - Publications and data: - Weekly ORA (Official Reserve Assets) data published; monthly ORA and related tables released on the 30th day after reference period. - Advance Release Calendar published for weekly ORA and monthly international reserves and foreign currency liquidity data. - Quarterly MPR, Annual Report, FSR and Monetary statistics calendar disclosed. - Publication commitments: - BAM states financial statements posted on website no later than May 31 following financial year; Annual Report submitted to His Majesty the King before June 30 (Article 50). ### Mission Assessment and Closing Remarks - Mission assessment: BAM has implemented expanded and comprehensive transparency practices for price stability and financial stability mandates; high-quality cooperation from BAM staff acknowledged. - Remaining recommendations prioritized in a roadmap with monitoring arrangements and classifications for implementation timing and further analysis. *Source: IMF CBT review material for Bank‑Al Maghrib contained in the provided content unit.* ### EXECUTIVE SUMMARY __________________________________________________________________________ 4 ### EXECUTIVE SUMMARY ### Overview and Context - The Bank Al-Maghrib (BAM) has implemented expanded and comprehensive transparency practices in a number of areas, notably related to the primary mandate of price stability and the shared mandate of financial stability. - The BAM’s public commitment to transparency is anchored in the new 2019 BAM Law and articulated as a strategic orientation under the quinquennial plan for 2019-2023. - Recent communication efforts rely on digital channels, the website, video, and social media; creative educational platforms have been developed to improve financial education. - A specific communication strategy is recommended to coordinate priorities, timeframes, and targeted actions. ### Transparency in Governance, Risk Management, and Accountability - Governance disclosures: - The legal framework governing the BAM—including legal structure, nature, mandate, and autonomy—is well disclosed, including historical context and evolution. - Recommendation: distinctively describe the BAM’s functions in addition to its objectives, and elaborate the connection of functions to each objective. - Risk management disclosures: - The BAM provides an overview of financial and non-financial risks and defines roles and responsibilities of bodies involved. - Recommendation: enhance disclosures by publishing a risk statement, mapping key risks to the BAM’s mandate with mitigation measures, and providing information on the Risk and Compliance Committee and the Internal Coordination and Management Committee (composition, powers, roles, responsibilities) and their interaction with the Audit Committee. - Accountability and external audit: - Key accountability mechanisms are identified in the Annual Report and website. - Recommendation: disclose commitment to independence of external audit and publication practices for annual audited financial statements. - Confidentiality framework: - The Law on the Right to Access Information and the BAM’s statute provide a confidentiality framework that needs clearer public explanation. - Recommendation: strengthen dissemination and disclosure to the public, articulate institutional implementation in accordance with relevant Moroccan legislation (Law 31-13 on the Right to Access Information) and constitutional principles, and explain different degrees of confidentiality. ### Monetary Policy, Foreign Exchange, FX Reserves, and Operations - Monetary policy transparency: - The transparency framework for monetary policy is comprehensive, covering policy decisions, supporting analysis, monetary operations, and related reporting, with high timeliness and periodicity. - The BAM has explained the benefits of adoption in due time of an inflation targeting monetary framework. - Recommendation: consider publishing minutes of the BAM’s Board meetings or, as a first step, disclose main discussions and debates that support monetary policy decisions as reflected in Board meeting minutes. - Exchange rate policy and FX implementation: - The January 2018 decision to move to a flexible exchange rate regime and the July 2019 BAM statute have supported transparency advances. - The institutional framework involves multiple public agencies (Ministry of Economy and Finance—MoF, Office des Changes, and BAM), creating potential public confusion over roles. - Recommendation: add to the website a section dedicated to the actual design and implementation of foreign exchange policy, and consider disclosing key elements of the annual letter sent by the BAM to the Minister of Economy and Finance related to the BAM’s advisory role with regard to Morocco’s foreign exchange regime. - FX intervention and reserve management: - Operational framework and instruments of foreign exchange interventions (FXI) are clearly disclosed, including links with monetary policy implementation. - Disclosure on the role of the Monetary and Financial Committee (MFC) in monitoring the domestic FX market and approving the FXI budget would improve accessibility. - FX reserve management disclosures on objectives and risk exposures are broad; investment policy elements such as investment constraints, eligibility criteria, concentration rules for counterparties, and methods for investment and risk decisions are not published. - Recommendation: enhance disclosure of investment policy constraints and decision-making methods to elevate accountability in the event of financial losses. - Monetary operations and instruments: - The BAM’s transparency on monetary operations (instruments, coverage, access) is well established. ### Macroprudential Policy, Financial Stability, and ELA - Macroprudential framework and financial stability monitoring: - The Systemic Risk Coordination and Monitoring Committee (CCSRS) is the main public source on surveillance of risks to financial stability; the annual Financial Stability Report (FSR) is expansive and informative. - Recommendation: post-meeting press releases could disclose more details on the financial stability analysis underlying Committee deliberations and conclusions; disclose more on stress testing models, assumptions, results, and their policy use. - The FSR discloses design details of macroprudential tools and expected mitigation of specific systemic risks. - Emergency Liquidity Assistance (ELA): - Inclusion of ELA provisions in the BAM Law clarifies the central bank’s role. - Recommendation: disclose operational modalities for ELA (including how disclosure would be handled while maintaining confidentiality as required). ### Financial Integrity (AML/CFT), Consumer Protection, and Official Relations - AML/CFT supervisory role: - As Morocco’s designated AML/CFT supervisory authority for credit institutions, the BAM discloses general information on supervisory powers, policies, processes, and internal control framework. - Recommendation: publish more detailed information on internal AML/CFT control activities (including statistical information on completion rates), disclose outcomes of internal controls annually (oversight and effectiveness), and publish information related to independent audits of AML/CFT internal control policies and activities. - Official relations and international cooperation: - The BAM’s official relations disclosures are mainly via press releases summarizing interactions with the government, bilateral public institutions, and international cooperation. - Recommendation: publish agreements that are in the public domain or upon counterpart agreement; explain the advisory role of the BAM with the Ministry of Finance regarding foreign exchange policy in all relevant communications to improve public understanding and accessibility. ### Key Recommendations (as enumerated) 1. Legal framework: - (i) Distinctively describe the BAM’s functions in addition to its objectives; (ii) further elaborate on aspects of the BAM’s governance on the website including legal nature, judicial review of decisions, and legal protection of officials. 2. Risk management: - Expand website coverage to include: (i) a risk statement and information on developments of key risks; (ii) a high-level overview of key risks mapped to BAM’s mandate and mitigation measures; (iii) information about the Risk and Compliance Committee and the Internal Coordination and Management Committee (composition, powers, roles, responsibilities) and interaction with the Audit Committee. 3. Accountability mechanisms: - (i) Disclose commitment to independent external audit conducted in accordance with Moroccan/international standards; (ii) describe publication practices for annual audited financial statements. 4. System of institutional communications: - (i) Publish a transparent communications policy anchored in existing legislation and BAM’s transparency values; (ii) include assurance of timely information to media/journalists; (iii) develop a specific communications strategy aligned with BAM’s general strategy and objectives. 5. Financial integrity: - (i) Disclose more detailed information on internal AML/CFT control activities including completion rates; (ii) disclose outcomes of internal AML/CFT controls annually, including oversight and effectiveness; (iii) publish information on independent auditing of AML/CFT internal control policies and activities. 6. Confidentiality framework: - Strengthen dissemination and disclosure in: (i) accessibility to the public; (ii) articulation of institutional implementation in accordance with relevant Moroccan legislation (Law 31-13 on the Right to Access Information) and constitutional principles; explain to the public. 7. Monetary and foreign exchange policy and operations: - (i) Consider publishing minutes of the BAM’s Board meetings or, as a first step, disclose main discussions and debates that support monetary policy decisions as reflected in Board meeting minutes; (ii) add to the website a section dedicated to design and implementation of foreign exchange policy; (iii) disclose key elements of the annual letter sent by the BAM to the Minister of Economy and Finance related to the BAM’s advisory role on Morocco’s foreign exchange regime. *EXECUTIVE SUMMARY — 1marea2022002* ### 8. Financial stability and stress testing: (i) Define and disclose the key operational ### 8. Financial stability and stress testing ### Key recommendations (operational transparency and disclosures) - Financial stability and stress testing: - (i) Define and disclose the key operational modalities that would be implemented in the event of an activation of the ELA framework; - (ii) disclose further details about the methods of analysis and underlying data used for financial stability assessments; and - (iii) publish further details about stress testing methods and results, and the use of stress testing results in formulating policy. - Macroprudential policy: - (i) Publish within a reasonable time period minutes of the policy deliberations of the CCSRS, perhaps redacted to avoid any market-sensitive issues, or as a first step, disclose the main discussions and debates in the committee; - (ii) publish ex-post evaluations of policy actions that examine whether tools had the intended effects; and - (iii) institute a customary process of public consultation (with published proceedings) prior to implementing new macroprudential tools or making major changes to the design of existing tools. - FX Reserves Management: - (i) Enhance disclosures on the framework, policy objectives, investment and risk constraints, or benchmarks along with the framework for oversight responsibility possibly in a specific section on FX Reserves Management on the BAM’s website; and - (ii) disclose the applied methods for reaching investment and risk decisions along with supporting analysis. - Official relations: - (i) Explain the BAM’s official relations with the MoF and other government bodies in an easy and understandable manner; if possible disclose terms and conditions of agreements; - (ii) disclose and explain further to the public the BAM’s advisory role on matters related to foreign exchange policy; and - (iii) disclose international cooperation efforts with detailed information easily accessible by the public possibly in a dedicated section on the website. ### Scope and objective of the CBT review - At the BAM’s request, the mission conducted a Central Bank Transparency Code (CBT) review for Bank-Al Maghrib (BAM). This review is the fifth conducted under the CBT pilot program. - Scope covered all CBT principles for areas in which the BAM has been given a mandate. - Cross-Border Financial Flows and Foreign Exchange Administration were removed from the scope because the Office des Changes (Ministry of Economy and Finance) is responsible for foreign exchange regulations, licensing and supervision of money changers. - The BAM’s responsibilities regarding implementation of exchange rate policy defined by the Government, and its advisory role, are covered in the Monetary Policy, Foreign Exchange Management sections of the CBT (Pillars II, III, and IV), and in Transparency in Official Relations (Pillar V). - The review excludes functions already covered by established international standards (prudential supervision of banking, resolution, and Financial Market Infrastructures). - The 2016 Technical Note on Banking Supervision and 2016 Technical Note on Crisis Management, Bank Resolution and Financial Sector Safety Net were not referenced in Appendix I as they were deemed outdated. - The review maps BAM’s transparency choices against CBT best practices covering transparency in: (i) governance; (ii) policies; (iii) operations; (iv) outcomes; and (v) official relations. ### Approach and methodology - The mission’s review approach: - Desk review by the MCM mission team based on information disclosed by the BAM on its website and other media in French, English, or Arabic. - A comprehensive self-review completed by the BAM, facilitated by an IMF staff presentation of the CBT Code. - In-depth discussions with BAM staff and key stakeholders; stakeholder meetings were planned with BAM coordination but BAM staff were not present. - The review was conducted principle-by-principle, considering transparency dimensions including: (i) timeliness; (ii) periodicity; and (iii) quality of disclosure (accessibility and ease of understanding). - Views expressed by stakeholders were taken into account. ### Background: recent macroeconomic and policy context - COVID-19 and recovery: - GDP is forecasted to grow by 6.3 percent in 2021. - The BAM lowered its policy rate by 75 bps to 1.5 percent in 2020 and maintained it unchanged throughout 2021. - A wide scale liquidity provision supported the banking sector; medium-term inflation expectations remained well anchored. - After last year’s sharp contraction, the current account deficit is projected to return closer to pre-pandemic levels. - Morocco emerges from the pandemic with a stronger international reserve position. - Transition toward an inflation-targeting framework: - In 2015 the MoF and BAM publicly announced intention to transition to a more flexible exchange rate arrangement and move to an IT monetary regime. - The MoF widened the fluctuation band of the dirham from +/- 0.3 percent to +/- 2.5 percent around the central rate set by the BAM (basket: 60 and 40 percent respectively for the euro and the US dollar). - On March 9, 2020, the monetary authorities moved to the second phase of the transition by widening the fluctuation band from ±2.5 percent to ±5 percent. - Monetary policy framework and operations: - BAM operates a mid-corridor interest rate system including a broad range of open market operations, standing deposit and lending facilities, and reserve requirements. - In response to COVID-19, the BAM discontinued the use of reserve requirements by bringing down the ratio to zero. - The BAM revamped its macro-forecasting framework and formalized monetary policy decision processes. - Macroprudential and financial stability role: - BAM publishes annually, jointly with other financial regulatory bodies, a report on the stability of the Moroccan financial system. - The BAM’s Law sets the legal framework for provision of Emergency Liquidity Assistance (ELA). - The Systemic Risks Coordination and Monitoring Committee (CCSRS) is chaired by the Governor of the BAM and coordinates supervisory actions; a Crisis Committee (CC) chaired by the Minister of Economy and Finance coordinates financial crisis management. - The 2015 FSAP update recommended clarifying CCSRS powers and decision-making, implementing a countercyclical buffer, expanding data coverage for the risk map, and expanding targeted instruments. Subsequent actions: - A countercyclical buffer has been implemented. - The risk map was reviewed and updated. - Data coverage has been improved. - Progress in clarifying CCSRS powers and decision-making process remains pending. - The BAM undertook two rounds of macro stress tests in 2020 with IMF technical assistance; results showed overall resilience of banks to the shock scenarios. ### COVID-19 related BAM measures (Box 1 summary) - Monetary policy actions: - The BAM lowered twice the key rate by a total of 75 basis points, bringing it to 1.50 percent. - Freed up the required reserve account in full and extended the list of assets eligible for refinancing operations, tripling their potential to 450 billion dirhams. - Set up specific refinancing lines for micro-credit associations and participatory banks; expanded refinancing for SMEs to include operating loans and increased injection frequency. - Microprudential and consumer protection: - Temporary easing of prudential rules on capital and loan provisioning to strengthen banks’ ability to support businesses and households. - Enhanced customer protection by calling on banks to be more transparent in application of CVE measures relating to credit and reasons for rejecting credit applications; supported missions of the banking mediation office. - Macroprudential: - As chair of the SRCSC, BAM set up a sub-committee with regulatory authorities and the MoF to monitor crisis risks to financial stability. - Conducted two macro stress tests to assess impact on banks’ solvency. - Capital Conservation buffer was lowered from 2.5 percent to 2 percent and banks were allowed to maintain liquidity buffers below the minimum liquidity coverage ratio of 100 percent. The former measure was still in force in April 2022, and the latter measure was withdrawn at the end of June 2020. - Other operational responses: - Coordinated an appropriate cash supply plan in response to exceptional increases in cash withdrawals, with banks, payment institutions and microcredit associations. - Ensured continued production of banknotes and identity/security documents while adapting work organization to health constraints. - Drew upon the IMF’s precautionary and liquidity line (PLL) on April 7, thereby providing an additional 3 billion U.S. dollars in foreign exchange reserves. - Continued implementation of strategic plan projects, including widening the FX fluctuation band (March 9, 2020), advancing the National Financial Inclusion Strategy, licensing 16 payment institutions, operationalizing 19 “m-wallet” offers, and establishing interoperability through the Switch Mobile. - Did not interrupt institutional and analytical publications and issued them within planned deadlines. ### Legal, institutional and regulatory notes - The June 2019 Law: - Strengthened BAM’s autonomy in monetary policy. - Made price stability the core objective. - Gave BAM responsibility to implement exchange rate policy defined by the Government and formally allowed it to give views on related government projects. - Gave BAM the mission to contribute to financial stability and institutionalized advisory committees. - AML/CFT framework: - Law No. 43-5 assigns three AML/CFT supervisory authorities. - Morocco’s National Financial Intelligence Authority (ANRF) is the focal point; BAM is one of its thirteen Board members. - BAM is the designated AML/CFT supervisor for banks, off-shore banks, finance companies, micro-credit associations, payment institutions, the Deposit and Management Fund, and the National Society of Company Guarantees and Financing. - The Governor of the BAM chairs the SCCSR to support macro-preventive supervision coordination. - Consumer protection: - Law no 31-08 confers to the BAM the power to protect customers of credit institutions, including proactive disclosure of regulatory standards and a mechanism for transferring complaints to the Moroccan Mediation Center (CMMB). - Financial inclusion: - By law, BAM has a financial inclusion mandate and has finalized the National Financial Inclusion Strategy. - BAM plans to focus on implementation to reduce disparities for young people, women and rural populations. *Source: IMF CBT review material for Bank-Al Maghrib contained in the provided content unit.* ### Box 2. Mission of Bank-Al Maghrib with Regard to Financial Inclusion ### Box 2. Mission of Bank‑Al Maghrib with Regard to Financial Inclusion ### Legal framework and institutional arrangement for financial consumer protection - BAM operates under Law n°103-12 relating to credit institutions and similar entities and Law n°31-08 enacting consumer protection measures. - Consumer protection is integral to the Strategic Plan 2019-2023 and the National Financial Inclusion Strategy. - BAM has a mechanism for transferring complaints to the Moroccan Mediation Center to strengthen grievance handling and comply with a hierarchical system for consumer protection claims. - Financial education actions on consumer protection are implemented through the Moroccan Foundation for Financial Education (FMEF). ### Scope of competence on consumer protection - BAM’s scope includes all financial institutions supervised by the BAM under Law No. 31-08 and Law 103-12. - The list of supervised institutions is disclosed on the BAM’s website. ### Disclosure and transparency of fair treatment and business conduct measures - Regulatory standards on fair treatment and business conduct are disclosed and disseminated to the public. - A monitoring system supervises implementation by credit institutions and the sufficiency of disclosure of such measures. ### Dispute resolution mechanism on consumer protection - Financial institution is the first recipient of a claim. - If unresolved, an alternative dispute resolution mechanism exists via a mediation center organized by BAM and banking associations. - Decisions of the mediation service are binding on banks. - The mediation center is free of charge for the financial consumer. - If unresolved by the institution and mediation center, the consumer may present the claim to BAM directly as a last resource. ### Financial education implementation by FMEF - The financial education strategy prioritizes consumer protection. - Activities include designing education programs, coordinating stakeholders, implementing programs tailored to vulnerable sectors, and disseminating educational material on consumer protection. ### On-site supervision - Since 2016, BAM has conducted thematic on-site inspections on market practices to ensure credit institutions comply with customer protection laws and regulations. - Inspection actions are disclosed in the Banking Supervision Report and disseminated to the media. ### Accountability and public reporting of the consumer protection system - Double reporting: BAM reports through the Banking Supervision Report; the Mediation Centre issues its own activity report on consumer claim resolution. - Statistical information on the efficiency of the system is disclosed to the public. - Sources cited: Law n°103-12, Law n°31-08, FMEF and BAM’s websites. ### MAIN FINDINGS — A. Pillar I. Transparency in Governance - 27. Legal framework governing the BAM (structure, nature, mandate, autonomy) is well disclosed; publishes Law No. 40-17. Recommendation: further enhance transparency by distinctively describing functions (in addition to objectives) and elaborating on governance aspects such as: - (i) draft regulations and circulars; - (ii) explanations of BAM’s legal nature and limits of judicial review of BAM’s decisions; - (iii) description of BAM’s powers stipulated under the BAM law; - (iv) major findings/executive summaries of audits conducted by the Court of Auditors; - (v) amounts of remuneration/indemnity received by all Council members or the mechanism for deciding such amounts; - (vi) additional information on the tenure period of the six Council members appointed by the Head of Government. - Recommendation: disclose how BAM is remunerated by the State for banking and financial services provided. - Recommendation: explain or define “insufficiency of capital” for recapitalization purposes under Article 2 (would be informative to stakeholders). - 28. Risk management function established in 2005 is well developed and aligned with leading practices. Gaps and recommendations: - Publish additional information on the risk management framework and practices (composition, powers, roles, responsibilities of Risk and Compliance Committee and Internal Coordination and Management Committee). - Disclose interaction between Audit Committee and operational committees. - Provide detailed description of actions to identify, evaluate, and mitigate risks and link to Global Risk Management Policy published on BAM’s website. - Disclose crisis management system and business continuity arrangements (noting the pandemic context). - 29. External audit practice: BAM is audited annually by an independent external audit firm applying Moroccan professional auditing standards aligned with International Standards on Auditing (ISA). Gaps and recommendations: - Align de jure framework with de facto practice by including requirements for auditor independence and applicable auditing standards in BAM Law (currently in internal Instruction No. 3/G/2015 but not publicly known). - Publish information on current external audit practices. - 30. Timely publication practice of audited annual financial statements and external audit report is robust (external audit usually completed within three months after financial year end; full set of accounts published on the website in advance of Official Gazette and Annual Report). Gap: - Underlying legal requirement and explicit deadline for publication of audited financial statements are absent in BAM Law. - Article 50 requires submission of the Annual Report to His Majesty the King before June 30 of year following the financial year but does not explicitly require audited financial statements be included; deadline for publication in Official Gazette is after “it is submitted to His Majesty the King.” - Recommendation: publish a commitment on the website to continue timely publication practice. - 31. Internal audit: function is established de facto; high-level description and Internal Audit Charter (French) are published. 2019 and 2020 Annual Reports provide internal audit program details, major audited processes, QAIP information, frequency of external assessments, and most recent assessment result. Recommendation: highlight QAIP details on the website. - 32. Anti-corruption measures and codes of ethics/conduct are available on the website (published in French). Details: - Board’s code: provisions on avoiding conflicts of interest (Article 3) and use of confidential information (Article 4). - Staff code: Article 16 lists examples of acts of corruption and prohibits abuse of position; Articles 17–19 cover gifts and invitations; Article 23 refers to whistleblowing mechanism for staff and external parties. - Whistleblowing modalities (including form) are published on the website. - Anti-Bribery Policy published; BAM states commitment to conduct business with integrity and highest ethical standards. - 33. Human Capital Management: disclosures on website and in Annual Report include staff numbers, gender split, area of activity, average tenure, average age, succession management, training initiatives, pandemic protections. CSR policy published and signed by the Governor includes commitments on ethical governance, developing human capital, diversity (gender), equal opportunities, healthy and safe working environment. Recruitment: “careers” portal (French) with vacancy information and staff videos. Recommendations to enhance transparency: - (i) explicit statement that BAM recruits and promotes on non-political grounds; - (ii) references to laws prohibiting patronage and discrimination; - (iii) further information on human capital retention. - 34. Institutional communications arrangement needs anchoring in a general communications policy. Recommendations: - Disclose communications department functions and procedures (criteria and possibility for management to interact with media/public; decision-making process for disclosure; approval/validation; time frame to respond to information requests). - Develop general policy as regulatory framework to implement a specific communications strategy harmonized with Strategic Plan. - 35. Communications tools are comprehensive and website praised. Current tools: publications, reporting mechanisms, central website, social media, educational videos, television, press releases, televised press conferences. Information published in French, Arabic and English. Recommendation: provide simplified versions of technical material and develop specific communications strategy aligned with Strategic Plan 2019-2023; disclose institutional functions of Communications Department. - 36. Confidentiality system disclosure recommended. Recommendations: - Proactively disseminate and publish the confidentiality legal framework and its means and methods of implementation. - Specify BAM functions considered confidential and degrees of confidentiality, following public institutional practice and regulations. - Clarify circumstances under which BAM must disclose specific information. ### MAIN FINDINGS — B. Pillars II, III, and IV. Transparency in Policies, Operations, and Outcome Monetary Policy - 37. BAM discloses objectives and policy framework supporting monetary policy and progress toward an inflation targeting (IT) regime, supported by migration to a flexible exchange rate regime announced in January 2018 by MoF and BAM. - Documentation accessible through BAM website, relevant publications, and communication events; includes explanation of how monetary policy is designed and implemented relative to price stability mandate. - BAM provides timely updates on domestic FX market building blocks for exchange rate flexibilization. - BAM discloses results of monetary policy decisions (policy rate and other instruments) via Press Release and Monetary Policy Report (MPR) on the day of the Board meeting; the Governor holds a press conference accessible through BAM social media. - BAM discloses a comprehensive set of economic data on a timely basis, resulting in high transparency regarding monetary policy and main economic risks to price stability mandate. Operational framework - 38. BAM discloses monetary operational framework including operational targets, objectives, and tools; detailed elaborations in regulations governing discretionary open market operations, standing facilities, policy rate, and reserve requirements are available and timely updated on the website. - Periodic publications (quarterly MPR and Annual Report) discuss instrument use; historical (daily) data on autonomous factors of bank liquidity, flows and stocks of monetary instruments, and reserve requirement fulfilment levels are made available. - Categories of monetary policy counterparties and access criteria are clearly defined and disclosed. Accountability - 39. BAM discharges accountability via parliamentary committee hearings of the Governor; presentations are published on BAM website. - BAM recognizes broader accountability to the public reflected in comprehensive disclosures and presence on social media. - The Educational Space section of the website is used to discharge voluntary broader accountability goals to the general public. *Source: Box 2. Mission of Bank‑Al Maghrib with Regard to Financial Inclusion (excerpts and Main Findings).* ### 40. The intricate institutional framework for exchange rate policy and its ### 40. The intricate institutional framework for exchange rate policy and its ### Exchange rate framework and institutional roles - The institutional framework involves multiple public agencies: Ministry of Economy and Finance-MoF, Office des Changes, and Bank-Al Maghrib (BAM). - Feedback suggests the public may not fully appreciate the respective role of the involved public agencies, in particular regarding the scope of the BAM’s advisory role versus its statutory responsibilities. - Recommendation: addition to the website of a section dedicated to the actual design and implementation of foreign exchange policy to supplement the information already provided on the reform of the exchange rate regime. - Morocco’s fixed exchange rate regime defined by the government is clearly disclosed by the BAM, including the basket of currencies that is used and the associated fluctuation band. - The Ministry of Economy and Finance has delegated to the BAM the regulation and monitoring of the domestic FX market, including the ability to conduct FXI as needed in view of the exchange rate regime in place. ### FX interventions, market operations, and communication - Progress in the reform of the domestic FX market (a responsibility of the BAM) in view of the gradual transition to a more flexible exchange rate regime are timely and clearly explained through various tools (sections of the BAM’s website, the BAM’s periodic publications). - The related regulations are timely disclosed on the BAM’s website. The operational framework for FXI is disclosed in the BAM’s published regulations. - Given the pegged regime, the disclosed aim of FXI aim is to maintain the exchange rate within the fluctuation bands while respecting the limits of the intervention budget. - FXI, which are not very frequent, are carried out mainly via public auctions; in the most recent period they have been preceded by a Press Release to explain the motivation for the policy actions. - The results of the auctions are disclosed in a timely manner on the website, as well as episodic over the counter FXI. - Eligible counterparties have to comply with a disclosed code of conduct. - Recommendations to enhance transparency: - Disclose the role of the Monetary and Financial Committee (MFC) in monitoring the domestic FX market and approving the FXI budget. - Disclose the purpose of each FX instrument (i.e., OTC, auction, etc.). - Disclose information on the BAM’s FX interventions on behalf of the Government, once the confidentiality nature of this information has been lifted. - Clarify that the annual letter sent by the BAM to the Minister of Economy and Finance covers issues related to the FX market and regime, and disclose key elements of the letter in that domain. ### Communication about transition to a flexible regime - Transparency practices regarding actions contemplated and taken to establish the building blocks for a flexible exchange rate regime are high. - The BAM explains to the public the expected benefits of a transition to a flexible exchange rate regime, most notably through the education material available in the Education Space section of the website. ### FX reserve management transparency - The BAM’s transparency practices in FX reserve management are broadly satisfactory but could benefit from further improvements. - The BAM discloses its broad objectives, governance with oversight responsibility along with broad risk exposures in the annual report. - Recommendations to improve transparency in reserves management: - Further explain the framework, policy objectives, investment and risk constraints, or benchmarks along with the framework for oversight responsibility. - Consider creation of a specific section on FX Reserves Management on the BAM’s website. - Consider publishing applied methods for reaching investment and risk decisions such as: - (i) The process to determine size of portfolio tranches aimed at meeting the key objectives of holding the foreign exchange reserves with their constraints; and - (ii) The process and methods for assessing the risk-return performance that is consistent with the strategic positioning of each portfolio. - Disclose the rationale and economic analysis backing methods of reaching investment and risk decisions and include an assessment of the adequacy of the reserves, liquidity and risk exposure comparatively to the policy objectives. - Consider disclosing the set of analytical frameworks used when computing reserve adequacy levels. - Enhance financial disclosures by providing advanced risk exposures metrics. ### Financial stability and macroprudential policies - The framework for macroprudential policy and financial stability monitoring is well-disclosed. - The Bank Al-Maghrib has a section of its website specifically devoted to financial stability, detailing the conceptual framework for macroprudential policy, including sections on the institutional framework. - The institutional framework includes the Financial Stability Committee internal to the Bank and the inter-agency Systemic Risk Coordination and Monitoring Committee (CCSRS), which comprises the Bank Al-Maghrib, the insurance and pensions authority (ACAPS), and the capital markets authority (AMMC). - The CCSRS meets semi-annually and issues press releases at the conclusion of each meeting, as well as an annual Financial Stability Report (FSR). - The FSR is expansive and informative, providing information on financial stability developments, stress testing and macroprudential policy. - Recommendations to enhance transparency in financial stability: - Provide further disclosure on the analysis underlying CCSRS deliberations and conclusions to address the 2015 FSAP recommendation for more clarity on the CCSRS decision-making process. - Include more details in the FSR on stress testing models, assumptions, and results (and their use in guiding policy). - Disclose more on the design of macroprudential tools and how their implementation is expected to mitigate specific systemic risks. - Consider publishing ex-post evaluations of the effectiveness of macroprudential policy. ### Emergency Liquidity Assistance (ELA) - The key features of the BAM’s ELA framework are provided in the BAM’s Statutes. - The operational modalities for its implementation are being prepared by the BAM and the Treasury. - Legal framework: the BAM’s discretionary granting of ELA is in line with the BAM’s mission of contributing to financial stability. - ELA may be granted to financial institutions experiencing temporary liquidity problems, while not raising concerns in terms of creditworthiness. - Where there are doubts about creditworthiness, ELA can only be granted with a guarantee from the Treasury. - Recommendation: disclose key operational modalities to be implemented in the event of activation of the ELA framework, including ex-post disclosure of actual ELA operations while maintaining necessary confidentiality. ### Financial integrity and AML/CFT - As the AML/CFT supervisor for credit institutions, the BAM plays a key role in safeguarding financial integrity; however, information on its internal AML/CFT controls could be enhanced. - The BAM discloses general information on its AML/CFT supervisory powers, policies, processes, and internal control framework. - Recommendations: - Supplement disclosures with information on independent audits of the unit in charge of the internal AML/CFT function. - Disclose more detailed information on internal AML/CFT controls and their effectiveness, including statistical information on the completion rates of internal AML/CFT control activities and the outcomes of the internal AML/CFT controls. - Consider publishing an annual AML/CFT compliance report. ### Transparency in official relations and inter-agency cooperation - There is room for improvement in disclosing the BAM’s official relations with the government and bilateral arrangements with domestic public financial agencies. - Important information, such as disclosures of MoUs and other cooperation and exchange of information actions, could be published to enhance public understanding of shared responsibilities. - The BAM’s advisory role with the Ministry of Finance regarding foreign exchange policy needs to be explained to the public in all its communications to enhance accessibility of current disclosures and to clarify tools and processes used for implementation. - Allocation of roles and responsibilities among the BAM, Ministry of Finance and Offices des Changes should be better explained regarding determination of foreign exchange policy. - Recommendation: BAM should continue to disclose inter-agency decision making procedures, roles, and responsibilities in a detailed manner to complement current disclosure practices such as reporting obligations and press releases. - The Systemic Risk Coordination and Monitoring Committee (CCSRS) comprises ACAPS, AMMC, the Ministry of Finance, and is chaired by Bank Al Maghrib; the arrangement is established in the BAM’s banking law and decrees published on the BAM’s official website. - Recommendation: reinforce and expand public disclosure of international cooperation in a dedicated section of the official website, including texts of cooperation agreements, Memorandums of Understanding (MoUs), and arrangements between the BAM and foreign institutions. - Recommendation: improve accessibility of press releases, perhaps in a permanent and exclusive section of the website. ### Consumer protection and financial education - The BAM has developed a system to safeguard the rights of financial consumers along with the Moroccan Mediation Center that collaborates on this endeavour. - The BAM has set up a mechanism for transferring complaints to the CMMB of which the BAM is a founding member. - Recommendation: add a tab on consumer protection on the central bank’s website and evaluate the mediation arrangement using transparency, timeliness, accessibility, and ease of understanding. - The BAM and the Moroccan Foundation for Financial Education have developed an arrangement to implement a comprehensive agenda on financial education that should be fully disclosed on the BAM website. - Recommendation: publicly disclose the arrangement, especially the goals of the Central Bank regarding financial education and how they are shared or articulated with FMEF actions. ### Detailed review, scope and methodology - This review is based on the current state of the BAM’s transparency practices. The mission took place during March 23-April 8, 2022. Initiatives implemented after the review date have not been considered. - In accordance with the CBT, this review does not assign ratings to the BAM’s adherence to the CBT principles. The review maps the BAM’s transparency practices across a range of best practices. - The review team examined the BAM’s transparency practices and tools, relevant laws and policies, and held meetings with some members of the BAM’s Board, management and staff, and key stakeholders including members of Parliament, senior officers from the MoF, Office des Changes, Commission de droit d’accès à l’information, Fondation Marocaine pour l’Éducation Financière, Centre Marocain de médiation bancaire, Autorité de Contrôle des Assurances et de la Prévoyance Sociale, Autorité Marocaine du Marché des Capitaux, Centre Marocain de Conjoncture, banking association representatives, academics, and the media. - The BAM provided a comprehensive self-review of the CBT, detailed responses to additional questionnaires, and access to relevant public documents. - The review required judgments by the review team given differences in central banks, domestic circumstances, and legal frameworks, but adhered to a common, agreed methodology to provide an internationally consistent benchmark for its transparency practices. *Source: 1marea2022002 - 40.* ### 59. The team appreciated the very high quality of cooperation received from the BAM. ### 1marea2022002 - 59. The team appreciated the very high quality of cooperation received from the BAM. ### Mission cooperation - The team appreciated the very high quality of cooperation received from the BAM. - The team extends its warm thanks to the staff of the BAM, who provided excellent cooperation, including provision of self-review, documentation, technical support, as well as facilitating the mission meetings schedule. ### Pillar I — Central Bank Governance: Principle 1.1 Legal Structure (Description) - The Bank Al-Maghrib (BAM) publishes information on its website regarding its legal framework and legal nature. - The BAM’s website has a specific educational section with targeted presentations for students and teachers covering historical context, evolution, governance, organizational chart, fundamental missions, etc. - The BAM’s official website explains the status and missions of the BAM and provides a historical context of the evolution of the legislation of the BAM, including explanations of the main improvements in the BAM Law. - The BAM’s official website includes the consolidated Law N 40-17 bearing Statutes of Bank of Al-Maghrib (The BAM Law), and a dedicated regulatory section covering related banking and credit legislation. ### Legal Framework — Findings - Article 80 of the BAM Law discusses transitional arrangements: provisions of all regulatory texts enacted pursuant to the previous law remain in force until replaced; all six members of the BAM’s Council appointed by the Head of Government shall on transitional basis continue to carry out their duties until their replacement. - Article 3 of the BAM Law stipulates: “Subject to the derogations provided for in this law, the Bank’s acts and operations shall be governed by the provisions of the legislation in force.” The principle regarding the override of the special law (The BAM Law) over the general law under Moroccan law may not be apparent to the public. - While the prerogative to initiate legislative amendments lies solely with the Government and not with the BAM, the BAM discusses regulatory texts and draft circulars with the “target public” such as professional associations, but does not publish draft regulatory texts for the general public’s review or comment. - The BAM Law and website include information on governance bodies: the Council, the Management Committee, the Monetary and Financial Committee, the Money Market Committee, the Financial Stability Committee, the Systemic Risk Coordination and Oversight Committee, and the Crisis Committee. ### Legal Nature — Findings - The BAM Law establishes the BAM’s legal nature, ownership, general legal capacity to act, and its instruments. - The educational presentation states that the BAM is the Central Bank of Morocco and is a legal person endowed with financial autonomy, but detailed aspects of the BAM’s legal nature are not clearly defined on the website. ### Legal Protection — Findings - According to BAM explanations, the BAM’s regulatory decisions may not be challenged in court, but it may be unclear how and where this is stated and the official website lacks information regarding this interpretation. - Article 12 of the BAM Law states that foreign exchange reserves may not be subject to protective or enforcement measures of the State nor guarantee obligations contracted by the latter; this limitation is not explained on the website. - The BAM is not immune from non-foreign exchange reserves pre-judgment attachments, though this is not publicly disclosed on the BAM’s website. - BAM explanation: “decisions of general scope taken within the framework of its regulatory mandate, in particular in the area of monetary policy, cannot be challenged or remedied by the courts because they fall exclusively within its discretionary power.” Other decisions of the BAM (administrative, social commercial correctional) are subject to judicial review as explained by the BAM. This distinction is not apparent from the BAM’s website. - Penal Code Article 224: BAM’s officials are protected from criminal liability for fulfilling their functions. - Articles 263 to 267: protection against contempt, violence and assault. - Provisions of section III of chapter IV of the press code as amended and supplemented by law n° 77-00 promulgated by dahir n°1-02-207 of October 3, 2002: protection against defamation and insult. - Article 10 of the Bank's Staff Regulations enshrines the Bank's obligation to protect its agents against threats, insults, attacks, insults or defamation in the exercise or due to the exercise of their functions. - It is unclear whether BAM’s officials are protected from civil liability for fulfilling their official actions; legal protection of BAM’s officials is not explained clearly and accessibly on the BAM’s website. ### Assessment Expanded - Legal Framework - The legal framework is explained both in the published BAM Law and additional information published by the BAM. The website contains information regarding the regulatory framework for supervised entities. - The principle that the BAM Law (special law) takes precedence over other legislation may not be comprehensible to the general public and may need further clarification. - The BAM is transparent with main stakeholders and actively communicates on new initiatives, but does not publish draft regulations or circulars. - Legal Nature - The educational presentation states that the BAM is the Central Bank of Morocco and a legal person with financial autonomy, but detailed aspects of legal nature are not clearly defined on the website. - Legal Protection - The nature and extent of judicial review of BAM’s decisions (both regulatory and other) may not be clear to the general public from the BAM’s website. - While under Moroccan law BAM’s officials may enjoy certain legal protection, the nature and extent of such protection may not be apparent from the website. ### Comments — Transparency enhancements suggested - The BAM’s transparency practice may be enhanced if: - The drafts of regulations and circulars are published; - Aspects of the BAM’s legal nature are explained in addition to what is enshrined by law; - Limits on review of the judiciary on the BAM’s decisions are explained on the website. - Since the BAM’s website explains the BAM’s monetary policy decision-making process in an easily accessible chart, and relevant information regarding legal, institutional and operational framework of the BAM’s financial stability objective is published under the BAM’s targeted educational site, it may be more accessible if the decision-making process of financial stability is also published on the Financial Stability tab of the website. - The publication of information regarding the mechanisms of legal protection of the BAM’s officials available under Moroccan law may enhance both their protection and the transparency of the existence of the BAM’s legal protection. ### Pillar I — Central Bank Governance: Principle 1.2 Mandate - The text continues into Principle 1.2: “Mandate: The central bank discloses its mandate—including its objectives, functions, and legally defined powers—in a manner that is clear and easily accessible to the public.” The source content ends at “Description Objectives” without further detail. *Source: IMF staff report excerpt.* ### Chapter II of the BAM Law lists the BAM’s core and additional missions. Under Article 6 of ### 1marea2022002 - Chapter II of the BAM Law lists the BAM’s core and additional missions. Under Article 6 of ### Missions and functions - Main objective (Article 6): ensure price stability; BAM shall define the price stability objective and conduct monetary policy. - Instruments to achieve price stability (website): the key rate and reserve requirement. - Additional missions (selected articles): - Supervise the banking system and credit institutions (Article 8). - Ensure the proper functioning, security, and efficiency of the payment system (Article 9). - Contribute to the stability of the national financial system within the Systemic Risk Coordination and Monitoring Committee (Article 10). - Implement the exchange rate policy within government-defined exchange rate regime (Article 11). - Hold and manage Morocco’s foreign exchange reserves (Article 12). - Issue Morocco’s legal tender. - Presentation and public education: - Core missions described under dedicated tabs on BAM website. - Specific educational section and a trilingual brochure explain the BAM’s core missions. ### Distinction between objectives and functions - BAM Law uses the concept of “mission” to cover both objectives and functions; the word “objective” is used once (price stability) and “objectives” appears on the website. - The hierarchy between main objective (price stability) and other objectives is clear on the website. - Intertwining of functions and objectives within chapter II articles may make distinction unclear to the general public. - Recommendation: Distinguish objectives from functions on website for public clarity. ### Powers (public and private) - Explicit powers in Law: - Print for its own account and that of foreign central banks (Article 21). - Acquire and dispose real estate (Article 22). - Acquire capital participation in public financial institutions (Article 23). - Powers limited unless carried out for performance of missions or benefit of staff (Article 24). - Dar As-Sikkah (mint) activities are described; other powers not extensively described on website. - Recommendation: Describe on website the BAM’s powers as stipulated under the BAM Law. ### Autonomy (Principle 1.3) — institutional/operational - Article 1: BAM endowed with financial and administrative autonomy. - Website explains four levels of autonomy: Board composition; restriction of Ministry of Finance representative’s voting rights at Board level; limitation on financing the Treasury; financial autonomy (financial autonomy not further explained on website). - Article 13: BAM and officials may not seek or accept instructions from Government or third parties in conduct of missions. - Law specifies when BAM shall cooperate with third parties (examples): - Implement exchange rate policy within government-defined regime and guidelines (Article 11). - Contribute to national strategy for financial inclusion (Article 14). - Contribute to financial system stability via Systemic Risk Coordination and Monitoring Committee (Article 10). - Represent Government before international financial and monetary institutions (Article 18). - Enter banknotes or coins in circulation together with Government (Article 58). - Website discloses participation rights (e.g., Director of the Treasury and External Finances is a non-voting Board member). - Gap: Detailed mandate and limits of the Financial Stability Committee vis-à-vis other institutions not disclosed; recommendation to publish detailed mandate and exercise of autonomy. ### Functional autonomy (Principle 1.3.2) - Functions not requiring prior government approval: using monetary policy instruments and operations (Article 7); supervising banks and credit institutions (Article 8); overseeing payment and settlement system (Article 9). - Functions requiring government input: implementing exchange rate policy (Article 11); negotiating external borrowings on behalf of Government (Article 16). - Government Commissioner roles: monitoring BAM financial operations (Article 41); signing banknotes (Article 54); involvement in capital increases (Article 2). - Court of Auditors role: Section 3 (Article 44) — role stated but practical exercise not apparent. - Recommendation: If audits by Court of Auditors are performed, consider publishing major findings or executive summaries annually (subject to Moroccan law). ### Personal autonomy (Principle 1.3.3) - Governor: - Appointment mechanism and eligibility criteria and tenure period clear (Article 30). - Governor receives remuneration fixed by a decree (decree not published on website). - Grounds for dismissal of Governor not stated in BAM Law. - Director General: - Appointment mechanism stipulated (Article 33); eligibility, tenure, dismissal grounds, remuneration not disclosed. - Board members: - Six members appointed by Head of Government: appointment mechanism, eligibility criteria, and duration of tenure clear (Article 26). - Board members may be “revoked”; termination grounds silent. - Six members receive remuneration fixed by a decree (Article 27); decree not published on website. - Code of Ethics for Board members is published. - Gaps and recommendations: - Law and website silent on termination grounds and dismissal process. - Consider publishing remuneration/indemnity amounts or mechanism, and tenure period details for Council members. ### Financial autonomy (Principle 1.3.4) - Legal and financial provisions (BAM Law): - Capital set at 500 million dirhams, fully paid up and held by the state (Article 2). - Article 2: building up capital from reserves; requires advice of Government Commissioner; Government shall make cash contributions to cover shortfall (unclear how insufficiency determined). - Profit distribution mechanism, general and special reserves (Article 48). - Accounting standards promulgated by National Accounting Council (Article 46). - Board approval requirements for budget (Articles 25 and 31). - Prohibition on granting loans to the State and overdraft facility conditions (Article 69). - Bank prepares its own budget, validation by Board (Articles 25 and 31); budget rules described in internal charter. - Services to State remunerated based on agreement (Article 17); agreement not published. - Revaluation of foreign assets and prohibition on distribution of unrealised gains (Article 72). - Published annual financial statements contain: - Note on accounting rules and valuation methods (p. 213-216). - Statement on changes in shareholder’s equity (composition and evolution) (p. 230-231). - Amount of Lending to the Moroccan government on balance sheet (face); no further explanation in detailed notes (p. 207). - Note explaining “foreign exchange reserve account” reflected under “other liabilities” and explanation on p. 230. - Assessment: BAM Law and annual financial statements provide comprehensive information on capital, reserves, profit distribution, recapitalization, and accounting standards. - Recommendations: Publish Bank’s budget rules on website; describe BAM remuneration by State for services; explain how capital insufficiency is determined under Article 2. ### Decision-making arrangement and governance (Principle 1.4) - Website disclosures: - Organizational chart, Governance Charter, Rules of Procedure of Board published. - Internal control system and Internal Audit charters published. - Risk management and business continuity policies and procedures published. - CVs/biographies of Board members published. - Assessment: Comprehensive disclosure of organizational structure and governance; recommendation to seek consent to publish Coordination and Systemic Risk Monitoring Committee charter. ### Risk management (Principle 1.5) - Risk exposure disclosures: - 2020 Annual Report discusses strategic, operational, reputational, and financial risks and mapping emerging risks from pandemic. - Global Risk Management Policy (GRMP) published; specifies roles/responsibilities and scope. - Audited financial statements disclose financial risk management and portfolio exposures by region and asset class. - Risk framework disclosures: - GRMP objectives: structured identification, evaluation, management, monitoring; provide Board with information; provide resources to business process owners. - Annual Report describes roles of Risk and Compliance Committee and Audit Committee oversight. - Gaps and recommendations: - Provide information on developments of key risks and a risk statement outlining stance on financial, operational, other risks. - Disclose level and developments in risk exposures and quantified demands on financial resources/buffers and brief methodology. - Provide composition, powers, roles of Risk and Compliance Committee and Internal Coordination and Management Committee and interaction with Audit Committee. - Public disclosures on crisis management and business continuity post-pandemic would be useful. ### Accountability framework and audits (Principle 1.6) - Financial statements and audit arrangements: - Article 46: books kept per National Accounting Board policies; Article 47: financial year January to December. - Board examines and approves management report and summary statements (Article 25). - External audit annually by a firm appointed by Board for fixed non-renewable term; external audit report submitted within five months of financial year end (Article 43). - Audit Committee oversees external audit and ensures independence; Audit Committee Charter published. - Annual Report to be submitted to His Majesty the King before June 30 following financial year (Article 50); publication in Official Gazette required after submission. - Governor sends monthly accounting statements to Ministry of Finance published in Official Gazette (Article 48). - Internal audit: - Internal Audit Charter published; reporting to Board through Audit Committee and to Governor. - BAM Law does not contain provisions establishing internal audit or protections for Chief Internal Auditor. - Internal Audit function follows IIA/IPPF standards; QAIP external assessments since 2009, five external reviews confirming adherence to IIA standards. - Disclosures: - Annual financial statements and external audit report published on website and in Annual Report. - Financial statements prepared per BAM chart of accounts approved by National Accounting Board; audit mentions Moroccan standards applied. - Audit Committee Charter and summary work reported in Annual Report. - Recommendations: - Reflect commitment to independent external audit and applicable standards on website. - Describe publication practices and deadlines for audited financial statements. - Disclose internal audit QAIP features and commitment to IIA standards. ### Anti-corruption, codes of conduct, and whistleblowing (Principle 1.6.3) - Codes of conduct: - Board and staff codes published; include conflict of interest, use of confidential information, examples of acts of corruption, rules on gifts/invitations, annual declaration of assets (Articles 26 and 27). - Codes updated every two years. - Anti-bribery: - Anti-Bribery Policy published; ISO 37001 certified (November 2019). - Official Governor statement committing to “zero tolerance” to bribery published. - Whistle-blowing mechanism established and published; allows anonymous alerts and alternatives to convey concerns to Head of compliance. - Sanctions mechanism defined in Code of Ethics (article 31) and Anti-Bribery Policy (article 11). - Recommendation: Disclose rules for accessing confidential information to further enhance transparency. ### Human capital management (Principle 1.6.4) - Disclosures: - 2020 Annual Report: staff diagram, gender split, area of activity, average tenure, average age; pandemic protections and training initiatives. - Careers portal with vacancies and informational videos; YouTube and LinkedIn presence; vacancies on civil service recruitment website. - 2019-2023 Strategic Plan includes HCM strategy and specialization objectives; succession management system updates in 2020 Annual Report. - CSR policy and CSR report (2015) published addressing HCM commitments. - Recommendations: - Disclose explicit statement that recruitment and promotion are non-political. - Reference laws that prohibit patronage and discrimination. - Provide further information on human capital retention. ### Communication (Principle 1.7) - Organizational placement: - Detailed Communication Division chart published including heads of unit. - Communications integrated in Strategic Plan (Strategic objective 5) and operationalized through multiple channels. - Responsibilities and processes: - Article 6: commitment to conduct monetary policy in a fully transparent manner as part of government’s economic and financial policy. - Chapter VII: obligation to present annual report published in Official Gazette, website, and other media, and submitted to His Majesty the King. - Article 45: Governor to be heard by Parliament’s finance permanent committee(s) upon their initiative; hearings followed by a debate (debate not public). - Article 51: after Board meetings Communication team shares press release and Monetary Policy Report on website and social networks; press conference organized immediately after Board meeting; Monetary Policy Report and press releases published same day as Board meeting. - Governor is official spokesperson (Article 30). - Channels and tools: - Website, educational website, social networks (Twitter, LinkedIn, Facebook, YouTube, Instagram), thematic brochures, videos, press releases, events, press area, calendar of Board meetings. - Reception unit handles public requests: switchboard 080 200 11 11; nearly 1000 calls handled monthly; e-mail accueil@bkam.ma; “useful information” brochures produced since 2021. - Website available in Arabic, French, and English; English versions mainly informational. - Evaluation practices: - Annual listening sessions/focus groups with journalists; yearly quality assessment of telephone reception; internal satisfaction assessments and reviews. - Assessment and recommendations: - Comprehensive communication strategy integrated into Strategic Plan; diversified channels and educational outreach. - Recommend a disclosed communications policy, media interaction policy with response timeframes, and more engagement with technical staff explaining policies. ### Confidentiality (Principle 1.8) - Legal and policy framework: - Confidentiality established in BAM Statute Article 39 and Law 31-13 on right to access information. - Codes of Ethics and Rules of Procedure (Article 8) determine confidentiality of Board meetings and professional secrecy (Personnel Statute article 16). - Global Information Security Policy (internal) sets criteria for classifying information; BAM updating classification to align with July 2021 regulatory grid. - Law on archives (66.99) defines deadlines for public access to archives. - Access to information: - Law No. 31-13 sets principle of access with explicit exclusions (article 7) including: - Information relating to private life or personal nature. - Information whose disclosure is detrimental to monetary, financial, or economic policy of the State. - Information detrimental to industrial property, copyrights, or related rights. - Information confidential by particular legislation. - Information whose disclosure infringes confidentiality of investigations or administrative inquiries unless authorized. - BAM applying Law No. 31-13 proactively and on-request; digitizing the access process; instruction to be published describing perimeter, proactive actions, measures to facilitate access, exceptions, conditions of use, deadlines, remedies, and actors. - Recommendations: - Publish confidentiality policy and rationale for disclosure/non-disclosure decisions on website. - Include link to Law 31-13 in legislation or confidentiality section. - When refusing access, explain reasons and track statistics (number of requests answered, number refused, average processing time) and publish in reports where legally permissible. ### Monetary policy (Pillar II, Principle 2.1) - Objectives and framework (Principle 2.1.1): - Monetary policy framework disclosed: exchange rate peg to a disclosed basket of currencies; strategy for achieving price stability (Article 6) available on website. - Instruments: policy rate and required reserve. - FX regime: fixed intermediate exchange rate pegged to basket reflecting structure of foreign trade; reform launched January 2018 for gradual transition to more flexible regime to adopt inflation targeting. - Governance: Board is highest authority; internal Monetary and Financial Committee (MFC) and Money Market Committee (MMC) contribute to preparation and implementation (role in 2020 Annual Report p. 161). - Implementation strategy and modernization efforts discussed in Annual Reports and Strategic Plan 2019-2023. - Educational videos on YouTube covering price stability, exchange rate regimes, and reform rationale. - Policy decisions and process (Principle 2.1.2): - Quarterly Board meetings follow predetermined schedule; press release, Monetary Policy Report (MPR), and press conference organized the day of the meeting. - Decision-making process: - Staff review key indicators and produce forecasting assumptions discussed at pre-MFC meeting; MPR version submitted to MFC. - After MFC comments, MPR submitted to Board for decision. - Implementation aims at steering interbank market via liquidity management to keep weighted average interbank rate close to policy rate. - Annual calendar of Board meetings published on website. - Minutes of Board meetings are not published. - Recommendation: Publish minutes or summaries to enhance transparency. - Supporting analysis (Principle 2.1.3): - Publications: weekly indicators, monthly Economic Review, MPR, Annual Report; calendar of publications published in advance. - MPR structure: - Part I: recent economic developments (international, external accounts, monetary, credit and asset markets, fiscal stance, demand/supply, labor market, inflation). - Part II: medium-term outlook, risks, main assumptions. - Forecasts: eight-quarter horizon; central forecasting model is a semi-structural New-Keynesian model supplemented by satellite models; projections presented with fan charts and balance of risks. - Database: nearly 400,000 economic, monetary, and financial series; surveys and BAM-produced data feed the forecasting process. - Methodological documentation: summary on website; detailed description in IMF Working Paper WP/18/27; MOPAM model described in Working Paper 2021-No1. - Research program and events: Journées Internationales de Macroéconomie et de Finance; Africa Meeting of the Econometric Society (July 2019); January 2020 seminar on model-based policy making. - Assessment: Comprehensive disclosures of data, models, scenario analysis, and research agenda. ### Foreign exchange management and cross-border flows (Principles 2.2, 2.3) - Institutional responsibilities: - Office des Changes (under Ministry of Economy and Finance) responsible for definition, implementation, enforcement of foreign exchange regulations, licensing and supervision of money changers. - BAM’s role: implement foreign exchange policy as part of regime and guidelines established by Government based on BAM’s opinion (Article 11); advisory role to Government. - FX policy and operational framework (Principle 2.3.1): - Website section on reform describes current peg to disclosed basket and rationale for reform since January 2018 toward inflation targeting; IMF Annual Report on Exchange Arrangements and Exchange Restrictions describes peg with weights of 60 percent (euro) and 40 percent (US dollar). - Governor’s Decision D.N.01/W/18 and Circular LC/BKAM/2018/1 define operational terms for FX interventions and auctions; these documents available on BAM website. - No disclosure on processes for fulfillment of BAM’s advisory role on FX regime; stakeholders perceive roles of MoF, Office des Changes, and BAM not well understood. - FX decision-making and communication (Principle 2.3.2): - Decision process limited to BAM FX interventions aimed at maintaining exchange rate within disclosed bands under legal framework. - Prior to FX auctions, BAM discloses features on website, Reuters, Bloomberg; a September 17, 2021 press release preceded a September 20, 2021 FX intervention (press releases have not always preceded all auctions). - Q3-2021, Q4-2021 and Q1-2022 MPRs analyze impact of FX interventions on banks’ FX positions and monetary conditions; Annual Report discusses autonomous factors of liquidity including changes in international reserves. - Recommendations: - Enhance educational disclosures to explain respective roles of MoF, Office des Changes, and BAM. - Consider creating a dedicated website section on design and implementation of foreign exchange policy and disclose elements of BAM’s advice relevant to public (e.g., key elements of annual letter to Minister of Economy and Finance per Governance Charter). *Source: 1marea2022002 - Chapter II of the BAM Law lists the BAM’s core and additional missions. Under Article 6 of (IMF content provided in the supplied PDF excerpt).* ### Chapter V of the BAM’s Monthly Economic, Monetary and Financial Bulletin (only available in ### Chapter V of the BAM’s Monthly Economic, Monetary and Financial Bulletin ### Foreign Exchange Intervention (FXI) and Exchange Rate Regime - Description: - BAM maintains a stable exchange rate against a disclosed basket of currencies within a disclosed fluctuation band of bid-ask exchange rates (currently set at 2.5 percent) determined by the Ministry of Economy and Finance around a central rate determined by the BAM (Governor’s Decision D.N.01/W/18). - Main FXI instrument: FX auctions; activation is clearly disclosed and has recently been associated with a Press release reiterating BAM’s FXI objective in view of the fixed exchange rate regime. - Press Release example: September 17, 2021 (prior to FX intervention planned for September 20, 2021) indicated the FX auction aimed at mopping up excess liquidity in the FX market. - BAM posts short educational videos on exchange rate regimes and the reform toward a flexible exchange rate regime; Governor discusses FX interventions in Board press conferences (recordings on BAM YouTube channel). - Assessment: - Expanded: Activation and rationale for FXI are appropriately disclosed and well understood by market participants given the fixed exchange rate regime. - The potential impact of FXI under the fixed exchange rate regime is disclosed. - However, disclosures do not allow distinguishing BAM’s discretionary FXI on the domestic FX market from FX operations for the government. - Comments / Recommendations: - Additional disclosure regarding the role of the MFC in monitoring the FX market and approving the intervention budget would enhance accessibility. - Disclose that interaction between FXI and monetary policy lies in defending the fluctuation band within the intervention budget. - Consider including this information in a website section dedicated to design and implementation of FX policy or in the section on reform of the exchange rate regime (as indicated in BAM’s self-review of the CBT code). - Disclosure of BAM’s FX operations for the government would allow stakeholders to disentangle the impact of discretionary FXI on domestic liquidity and produce better informed ex-post evaluations. ### Supporting Analysis for FXI (Principle 2.3.3) - Description: - BAM discloses assumptions, transmission channels, and analysis backing intervention policy decisions, and provides ex-post evaluation of economic impact in some publications (e.g., Q4-2021 MPR focusing on monetary conditions and impact of BAM’s FXI on banks’ FX position). - BAM provides overview of domestic FX market in Annual Reports and evolution of international reserves. - Assessment: - Expanded: Decision to activate FXI in response to domestic FX market developments is appropriately disclosed. - Absence of disclosures on BAM’s FX operations for the government prevents stakeholders from fully appreciating the impact of discretionary FXI on overall liquidity and money market conditions. - Comments: - Disclosure of FX operations for the government would enhance transparency and enable clearer ex-post evaluations. ### Foreign Exchange Reserve Management (Principle 2.4 and subprinciples) - Objectives and Framework (2.4.1): - Description: - Article 12 of law n° 40-17: management of FX reserves is a fundamental mission; Bank may delegate part of management to agents. - 2020 annual report discloses: broad objectives (security, liquidity and performance) (P.167); governance bodies and roles (Bank Board, MFC, Audit Committee) (P.217-219); classification and sizes of portfolios (Transaction Portfolio, Investment Portfolio, Portfolio of securities held for sale, and Other Foreign Assets) (P.214-215 & P.221); broad financial risk categories (credit, market and liquidity risks) (P.217); average rating (P. 218) and overall duration of portfolios (P.219). - Article 12 also: Bank may use reserves to preserve value of the dirham if regime and guidelines allow and after consultation with government authority in charge of finance. - Liquidity risk management aims to meet balance of payments financing needs over a one-year horizon and maintain liquid reserves to absorb shocks. - Assessment: Core — broad objectives, risk metrics and governance disclosed, but annual foreign exchange investment policy and specific investment constraints are not disclosed. - Comments: Consider creating a specific FX Reserves Management section on website explaining framework, objectives, investment and risk constraints, benchmarks, and oversight framework. - Policy Decisions (2.4.2): - Description: - 2020 annual report states reserve purposes, investment principles, asset class limits, issuer and counterparty eligibility set out in investment guidelines; strategic allocation decided by Bank's Board (P.217). - Intra-departmental Risk Committee ensures compliance before presentation to Risks and Compliance Committee and MFC (P.167). - Size of reserves’ liquid tranches (precautionary reserves and excess reserves) disclosed (P.219). - Assessment: Core — decision-making structure disclosed but investment directive and strategic allocation framework are not published; methods for decisions not disclosed. - Comments: - Disclose key elements of policy formulation, related risk exposures, and decision-making hierarchy. - Disclose process to determine size of portfolio tranches and methods for assessing risk-return performance versus benchmark. - Supporting Analysis (2.4.3): - Description: Supporting analysis is not published. - Assessment: Not implemented. - Comments: Consider publishing rationale and economic analysis behind strategic investment and risk decisions, and disclose tactical deviations and active management positions relative to benchmarks. ### Macroprudential Policy (Principle 2.5 and subprinciples) - Objectives and Framework (2.5.1): - Description: - BAM website section on financial stability discloses macroprudential conceptual framework, institutional framework (FSC internal to Bank, CCSRS inter-agency committee including ACAPS and AMMC), analytical framework including systemic risk mapping and stress tests, and summary technical note (2015). - Links to periodic documents: annual Financial Stability Report (FSR) and CCSRS press releases. - FSR annually explains intermediate objectives, conceptual and informational framework, and instruments; working papers (e.g., 2016) referenced. - Assessment: Comprehensive — comprehensive, articulated published description easily accessible; policy strategy explained yearly in FSR with instruments and changes. - Policy Decisions (2.5.2): - Description: - Macroprudential decisions coordinated in CCSRS (mandate in Banking Law 103-12, articles 108 and 110); Decree No. 2-17-32 of 14 September 2017 defines decision-making process and “Comply or Explain” monitoring; press release after each biannual meeting; future CCSRS meeting dates disclosed. - Dissemination methods depend on hierarchy: Governor’s Decision (e.g., Decision 80/W/20), circulars to banks (e.g., LC/BKAM/2020/8), press releases following Board decisions, stand-alone circulars (e.g., Circular 1/W/16 for countercyclical capital buffer in June 2016). - FSR discusses background and motivation for current levels of main tools. - Assessment: Expanded — announces introductions/adjustments timely via press releases and circulars; provides implementation windows (e.g., 12-month for countercyclical capital buffer); discloses CCSRS composition and upcoming schedule. - Comments: - CCSRS press releases are mostly descriptive; limited disclosure on basis for specific policy levels. - Consider publishing minutes or main discussions of CCSRS deliberations (redacted if necessary) to enhance transparency and indirectly enhance transparency of internal Financial Stability Committee and sub-committees. - Supporting Analysis (2.5.3): - Description: - Annual FSR assesses developments and risks, provides information on macroeconomic developments, financial positions of non-financial agents, robustness of institutions, capital market developments. - Since 2017, FSR includes macroprudential policy section explaining instruments, calibration methodology and analytical indicators. - Since 2018, FSR discusses financial stability index (Box 11 in 2020 edition); working paper December 2020 referenced. - BAM produces financial soundness indicators per IMF core set published in Annual Report on Banking Supervision; stress test outcomes disclosed in FSR (top-down, interbank contagion, bank-insurance contagion). - Assessment: Expanded — FSR appropriately analyses stability issues and discloses how tools mitigate risks; stress tests and financial stability index disclosed. - Comments: - Consider publication of quarterly financial soundness indicators in financial stability section. - Consider ex-post evaluations of policy actions examining intended effects. ### Emergency Liquidity Assistance (ELA) (Principle 2.7) - Description: - Article 67 of BAM Law establishes discretionary ELA: - May be granted to a credit institution with temporary liquidity problems not raising creditworthiness concerns. - May be granted to an institution with liquidity difficulties where there are doubts about creditworthiness, subject to having government guarantee. - For each case, BAM determines amount, conditions, and procedures for granting ELA. - Conditions for government guarantee set by regulation. - BAM may grant advances to deposit guarantee funds to reimburse depositors in special situations. - A draft BAM Instruction to implement Article 67 has been drawn up; this internal document will replace Instruction No. 24/G/13 (2013). A decree on conditions for State guarantees is being finalized by the Treasury and External Finance Directorate and, as a decree, will be published. - Limited transparency justified by risk of moral hazard. - Assessment: Core — legal framework and broad features established in BAM Law. - Comments: Transparency would be enhanced by disclosure of the operational framework. ### AML/CFT Supervision (Principle 2.10) - AML/CFT Supervisory Policies and Powers: - Description: - BAM is AML/CFT supervisory authority for Morocco’s banking sector under Law No. 43-05 and Law No. 103-12; role and powers described on BAM website. - Webpages publish Law 43-05, implementing texts, and revisions to Law 103-12. - Policy consultation: draft texts preceded by consultation with credit institutions, professional associations, ANRF, AMMC, ACAPS, and Office des Changes; drafts submitted to Credit Institutions Committee. - Additional AML/CFT webpage describes upgrading internal AML/CFT regulations to comply with FATF standards. - AML/CFT Internal Control Framework: - Description: - BAM discloses general information on internal framework: created “compliance & financial security” function in 2007 under Legal Department; Central AML/CFT Department and internal AML/CFT Prevention Committee (set up 2012) with relays across branches. - Organizational chart displays compliance function ‘Service Central de Lutte Contre le Blanchiment de Capitaux’. - Internal Audit and Risk Management Department assesses appropriateness of subjecting AML/CFT internal system to internal or external audit and publication of results; 2020 Annual Report (p. 173) contains internal audit overview; BAM explained last AML/CFT audit conducted in 2021-22 but does not disclose audit existence or results specifically for AML/CFT. - Confidentiality applied according to Bank’s Information Security Policy. - Assessment: Core — discloses AML/CFT supervisory powers and general policies; discloses internal control framework. - Comments: - Could disclose whether independent audits of AML/CFT internal control policies are performed and whether results are presented to the Board at regular intervals. ### Consumer Protection - Description: - Organizational chart and functions of Consumer Protection Department published (Financial Supervision Report and website); scope covers all types of financial institutions. - Consumer protection in BAM’s Strategic Plan 2019-2023 and National Financial Inclusion Strategy. - Legal framework: law n°103-12 and law n°31-08 establish BAM powers for customer protection. - BAM functions include: issuing regulatory standards and monitoring implementation; thematic on-site inspections on market practices since 2016; handling customer complaints. - Legislative and regulatory texts published in Official Gazette and on BAM website; pedagogical guides and educational capsules explaining complaint procedures (Arabic). - Grievance mechanism: hierarchy—first the credit institution, then Banking Mediation Center (https://cmmb.ma/), then BAM as last resort; BAM transfers certain complaints to CMMB under agreed modus operandi; transfer is optional and free. - Financial education: Moroccan Foundation for Financial Education (FMEF) created 2013; Governor chairs board; responsibilities include designing programs, educational content, neutrality, partnerships, and promoting good practices. - Enforcement: Banking law empowers BAM to apply sanctions (art 172 to art 179 of law 103-12); Circular No. 2/G/2007 lists acts subject to disciplinary sanctions and amounts. - Assessment: --- - Comments: - The arrangement with the Mediation Center (CMMB) is creative and instrumental; official interaction should be better explained on BAM website, not only in reports. - Explain interaction with FMEF on consumer protection and provide direct link or concise explanation of financial education framework for consumer protection. ### Monetary Policy Operations (Pillar III, Principle 3.1 and subprinciples) - Instruments (3.1.1): - Description: - BAM publishes list of instruments (Governor’s decision N° 80/W/20 and circular LC/BKAM/2020/8 of April 15, 2020): - Main operations: weekly auctions to bring interbank rate in line with policy rate; primary instruments: liquidity withdrawal operations in excess liquidity; 7-day advances in liquidity shortage. - Fine-tuning operations: one-off operations < 7 days (repurchase agreements or secured loans). - Standing facilities: overnight advances and overnight deposit facilities. - Long-term operations: repurchase agreements, secured loans, foreign exchange swaps (> 7 days). - Structural operations: purchases/sales of Treasury securities on secondary market and issuing/repurchase by BAM of negotiable debt instruments. - Operational target: weighted average rate of the money market. - BAM explains monitoring of autonomous factors of banking liquidity to calibrate discretionary operations. - Reserve requirement role disclosed as structural instrument (Article 2 of Governor’s decision N° 80/W/20). - Assessment: Comprehensive — monetary policy instruments fully disclosed on website. - Coverage (3.1.2): - Description: - Detailed regulations, terms and conditions disclosed and updated (Governor’s decision N° 80/W/20; circular LC/BKAM/2020/8). - Includes instrument characteristics, eligible collateral, operational procedures, reserve requirement ratio, remuneration, averaging provision (Article 2 of Governor's decision N° 80/W/20; articles 37 and 38 of LC/BKAM/2020/8). - Governor uses forward guidance in press conferences and related press releases. - Assessment: Comprehensive — characteristics and calibration framework disclosed; forward guidance used transparently by Governor. - Access (3.1.3): - Description: - Categories of monetary policy counterparties and access rights defined (Governor’s decision N° 80/W/20); LC/BKAM/2020/8 details eligibility criteria, nominative list of counterparties, accepted collateral by operation, and haircuts. - Article 4 of Governor’s decision N° 80/W/20 allows BAM to accept counterparties for Long Term and Structural operations beyond published list. - Assessment: Comprehensive — published regulations disclose counterparties’ framework. - Comments: So far BAM has not activated Long Term and Structural operations beyond published list as allowed by Article 4. ### Foreign Exchange Management and Domestic FX Market (Principles 3.2, 3.3) - Cross-Border Financial Flows and FX Administration (3.2): - Description: - Office des Changes (under Ministry of Economy and Finance) responsible for definition, implementation, enforcement of FX regulations and licensing/supervision of money changers. - BAM’s statutory responsibilities regarding implementation of exchange rate policy and advisory role covered across CBT pillars. - Assessment: Not Applicable - FX Management Instruments and Access (3.3.1, 3.3.2): - Description: - Instruction Générale des Operations de Changes (January 3, 2022) sets eligibility criteria and delegates organization/monitoring of domestic FX market to BAM (Article 19, Article 29, Article 31, Articles 40 and 41 referenced). - Market maker status granting access to BAM FX auctions is granted by BAM; terms published (Circular Letter LC/BKAM/2018/1). - Terms and conditions for FX regime implementation defined in Governor’s Decision D.N.01/W/18, Circular Letters LC/BKAM/2018/2 and LC/BKAM/2018/1. - Prior to FX auctions, BAM discloses features on its website, Reuters, Bloomberg; sometimes issues Press Releases (example: September 17, 2021). - Code of Conduct for FX market participants disclosed (Circular N.63/DAI/96). - List of currencies quoted and daily reference rates disclosed on BAM website. - Assessment: - Expanded (3.3.1): Regulations disclose instruments, eligibility criteria, and mode of access. - Comprehensive (3.3.2): Regulations disclose markets and agents targeted by FX policy and Code of Conduct. - Comments: - Transparency could be enhanced by disclosing the purpose of each FX instrument (OTC, auction, etc.) in a dedicated section on design and implementation of foreign exchange policy or updating section on reform of exchange rate regime. ### Foreign Exchange Reserve Management Instruments and Counterparties (Principles 3.4.1–3.4.3) - Instruments and Selection Criteria (3.4.1): - Description: - Article 71 of BAM statutes defines instruments eligible for reserve management; no references to specific selection criteria for each asset class. - 2020 annual report publishes breakdown of reserve exposures by asset class and geographic region (P.218); breakdown by currency and remaining maturities in note 2 of 2020 financial statements (P. 221). - Assessment: Core — eligible asset classes and breakdowns disclosed; selection criteria, investment horizon, and risk disclosures by asset class not disclosed. - Comments: Consider disclosing selection criteria, investment horizon, and risk disclosures by asset class. - Counterparty and Service Provider Selection (3.4.2): - Description: - Investment guidelines defining eligibility criteria are internal documents and not published. - Assessment: Not implemented. - Comments: Enhance disclosure by communicating choice not to publish rules and reasons, or publish minimum eligibility criteria (minimum credit ratings, eligible markets). - Adequacy and Liquidity Assessment (3.4.3): - Description: - 2020 annual report paragraph on liquidity risk describes reserve holding objectives; disclosures about minimum sizes of sub-tranches provide liquidity parameter information (P.219). - Assessment: Core — annual report contains broad discussion of reserve adequacy and liquidity arising from investment activities. - Comments: Consider publishing specific assessment of adequacy of reserves, liquidity and risk exposure relative to policy objectives (e.g., using the ARA metric). ### Financial Stability Assessments and Stress Testing (Principle 3.5) - Financial Stability Assessments (3.5.1): - Description: - Annual FSR (in cooperation with CCSRS members ACAPS and AMMC) assesses developments and risks: macroeconomic developments, financial position of households and non-financial companies, robustness of financial institutions, capital market and FMI developments. - FSR contains conceptual systemic risk map and section on emerging risks (technological, cyber, climate, sustainable finance); added box on financial stability index. - Working papers deepen analysis (e.g., financial vulnerability of non-financial enterprises, December 2021). - Semi-annual CCSRS meetings conclude with press releases reporting main conclusions and links to macroprudential stance. - BAM organizes bi-annual regional symposia on financial stability. - Assessment: Expanded — FSR publishes comprehensive assessment of main risks including emerging vulnerabilities; CCSRS press releases add frequency. - Comments: - Consider disclosing more details about methods and underlying data used for assessments (where compatible with data protection). - Consider making CCSRS post-meeting press releases more detailed on the financial stability analysis used in deliberations. *Source: Chapter V of the BAM’s Monthly Economic, Monetary and Financial Bulletin (excerpts provided).* ### conclusions. ### 1marea2022002 - conclusions. ### Macroprudential Stress Testing Methods (Principle 3.5.2) - Description - The Bank Al-Maghrib (BAM) provides detailed information on its stress-testing exercise in the FSR and on its website. - Disclosed elements include: - The types of institutions covered, including stress tests carried out by other financial regulators on insurance companies and capital markets. - The risks covered, including sensitivity analysis to credit, liquidity, and market risks, as well as scenarios of adverse macroeconomic developments, contagion risk, and climate risk. - Details on the baseline and adverse macroeconomic scenario, including main assumptions on external and domestic economic developments and information on the GaR/SVAR models used to develop the extreme scenario (2018 edition, box 4). - The time horizon considered in the tests. - Information on the evolution of non-performing loans and the capital position of banks over the estimation horizon. - A summary assessment of whether the evolution of the capital position of banks continues to conform to the regulatory minimum. - Separately, Directive 2/G/10 sets modalities of individual banks’ stress testing required for microprudential purposes. - Assessment: Expanded - Main information on design of macroeconomic stress scenario and risks covered is disclosed, along with underlying assumptions. - Some details on design, implementation, and results are lacking. - It is not disclosed whether the macroprudential stress-testing exercise makes use of stress tests required from banks (i.e., whether it has a bottom-up component). - Comments / Recommendations - Stakeholders generally confident in the exercise and saw limited need for additional disclosure beyond specialist audiences. - To achieve comprehensive transparency, BAM could consider disclosing: - The type of exercise and the extent to which banks are involved or banks’ own stress tests are used (top-down vs combination of top-down and bottom-up). - Details on estimation of the baseline and extreme scenarios and the authorities’ view on their plausibility. - Details on the satellite models used, in particular the credit-risk model and its links to the macroeconomic scenario. - Information on the evolution of financial statements beyond summary information on capital adequacy and non-performing loans. - Details on assumptions and results of liquidity stress tests, once implemented. - Additional details on the regulatory regime considered, including possible relaxation of regulatory prudential limits or macroprudential policy variables. - These details could be included in a comprehensive policy note or working paper on the stress-testing exercise, which is currently not available in published form. ### Stress Testing Coverage (Principle 3.5.3) - Description - The FSR discloses that the stress-testing exercise includes the eight largest banks, covering almost 80 percent of total assets of the banking sector (2020 edition, page 101). - Other regulators detail coverage of their own stress tests elsewhere in the FSR. - Assessment: Expanded - BAM discloses the type of institutions covered and the number of institutions. - Comments / Recommendation - To achieve comprehensive transparency about coverage, BAM could consider disclosing the names of the institutions covered in the stress tests. ### Central Bank Use of Stress Test Results (Principle 3.5.4) - Description - The FSR and the “stress test” section of the website indicate the purpose of stress tests is to evaluate regularly the resilience of banks to macroeconomic shocks and to aid in formulation of policies to mitigate adverse shocks. - Press releases of the CCSRS typically mention overall stress test results as one of the tools used by the CCSRS to evaluate banking-sector resilience. - Assessment: Core - BAM discloses the main purpose of the stress tests. - Comments / Recommendations - Stakeholders felt the stress test results served their purpose, especially given a well-capitalized banking sector shown resilient to significant adverse scenarios. - To achieve an expanded level of transparency, authorities could consider disclosing specifically how adverse aggregate or individual banks’ results would affect policy. - To achieve comprehensive transparency, BAM could consider disclosing how stress test results would affect all other aspects of its dealings with financial institutions. ### Macroprudential Policy Implementation (Principle 3.6) - Description - BAM discloses how it implements macroprudential policies, including design of instruments and enforcement arrangements across several subsections below. ### Instruments (Principle 3.6.1) - Description - Regulatory documents provide precise details on design and scope of implemented macroprudential tools (e.g., countercyclical capital buffer: Circular 1/W/16 of 10 June 2016). - Regulatory documents are published in a dedicated “Prudential Regulation” section of the website. - The FSR (2020 edition, chapter 3, section 7B) discloses objectives and scope of various macroprudential instruments in BAM’s toolkit. - No proscribed customary process of public consultation for prudential regulations prior to implementation, though regular engagement and discussions with supervised entities occur before submission to the Credit Institutions Committee as described in Articles 25 and 26 of Banking Law 103-12; deliberations of this Committee are not published. - Informal consultations include transmitting the FSR to banks, insurance companies and other financial market agencies along with a questionnaire; outcomes of this engagement are not published. - Assessment: Expanded - Regulatory documents on BAM’s website provide precise details; FSR provides clear statements on key design features and market impact. - Comments / Recommendation - Stakeholders value engagement with banks prior to major regulations, but a more formal public consultation process could be helpful. - To achieve comprehensive transparency, BAM could consider instituting a customary process of public consultation (with published proceedings) prior to implementing new macroprudential tools or making major changes. ### Enforcement (Principle 3.6.2) - Description - Macroprudential decisions are coordinated in the CCSRS; mandate established in Banking Law 103-12, Articles 108 and 110. - Article 108 requires CCSRS to monitor implementation by constituent members in respective mandates. - Enforcement by each agency is subject to enforcement and incentive mechanisms for general prudential regulation. - For BAM, mechanisms are set out in Articles 94 and 172 through 194 of Title VIII, “Disciplinary and penal sanctions” of Banking Law 103-12. - For AMMC, enforcement provisions are in Section III, Articles 8 through 13 of Law 43-12. - For ACAPS, enforcement provisions are in Chapter IV, Articles 19 and 23 of Law 64-12, and Title V of Law 17-99. - Assessment: Comprehensive - BAM discloses which agencies enforce macroprudential regulations and discloses both incentive mechanisms and penalties. - Comments - Enforcement mechanisms for prudential regulation at BAM were generally clear to stakeholders. ### Microprudential Supervision (Principle 3.7) - Description: (not detailed in this content unit) - Assessment: Not Applicable - Comments: This function falls outside scope of the CBT review given coverage by an established international standard. ### Emergency Liquidity Assistance (Principle 3.8) - Description - No disclosures observed. - Assessment: Not Implemented - Comments - BAM has indicated that ELA has not been activated since the setting up of the 2013 framework or enactment of the 2019 BAM Law. ### Resolution (Principle 3.9) - Description: (not detailed in this content unit) - Assessment: Not Applicable - Comments: This function falls outside scope of the CBT review given coverage by an established international standard. ### Financial Market Infrastructures (Principle 3.10) - Description: (not detailed in this content unit) - Assessment: Not Applicable - Comments: This function falls outside scope of the CBT review given coverage by an established international standard. ### Financial Integrity (Principle 3.11) - AML/CFT Supervisory Processes and Allocated Resources - BAM discloses general information on off-site and on-site AML/CFT supervisory activities on its webpage ‘Rôle de Bank Al-Maghrib dans le cadre du dispositif LBC-FT’. - The mapping process for ML/TF risks in the banking sector is disclosed and informs BAM’s risk-based assessment of supervised institutions. - Banking Supervision Annual Reports contain a dedicated section on ‘surveillance of financial integrity’ with general overview of on-/off-site supervisory approach and completion rates. - 2016 Banking Supervision Annual Report describes AML/CFT supervisory processes and follow-up of corrective actions based on on-site and off-site controls. - Annual Reports contain summary statistical information on supervisory visits and those with an AML/CFT focus (e.g., 2018 report: Of the 33 missions carried out, 11 were of a general nature and 18 of a thematic nature). - Annual Reports (e.g., p. 110 of 2019 report) contain general information regarding cross-border supervisory activities including AML/CFT assessments. - BAM discloses information on human and technical resources allocated to banking supervision in Annual Reports (e.g., 2020 report, p. 177) and specific training sessions, including on AML/CFT. - BAM discloses that “a structure responsible for ‘financial integrity’ has been in place since 2016 [...] made up of specific dedicated skills. It provides its contribution and expertise alongside permanent and on-site controllers on AML/CFT issues.” - Internal AML/CFT Control Activities and Allocated Resources - BAM discloses general information on its internal AML/CFT control activities, focusing on overview of internal AML/CFT risk management processes and tools for ML/TF risk management and reporting suspicious transactions. - The public organizational chart discloses human resources allocated. *Source: 1marea2022002 - conclusions.* ### references the compliance function ‘Service Central de Lutte Contre le Blanchiment de ### 1marea2022002 - references the compliance function ‘Service Central de Lutte Contre le Blanchiment de Capitaux’ ### AML/CFT supervisory activities and internal controls - Findings - The BAM discloses general information on its approach to off-site and on-site AML/CFT supervisory activities and on the human and technical resources allocated to these activities. - The BAM discloses summarized statistical information on the completion rates of off-site and on-site assessments (incl. AML/CFT) of its supervised entities. - The BAM discloses some general information on its internal AML/CFT control activities and on the human and technical resources allocated to them. - The BAM publishes outcomes of AML/CFT supervisory activities annually in the Banking Supervision Annual Reports, including the number of sanctions imposed each year and those that are ML/TF-related. - The BAM does not publish information (e.g., an annual compliance report) on the outcomes of its internal AML/CFT controls; such internal AML/CFT activity reports are shared internally only. - The BAM’s internal Instruction on ELA provision exists but is not disclosed on the BAM’s website; it specifies the BAM can communicate, if it deems necessary, about ELA provision. - Assessment - Core: disclosure of supervisory activities and some statistics. - Not Implemented: disclosure of outcomes of internal AML/CFT controls and ELA transparency. - Policy recommendations / Comments - Disclose more detailed information on internal AML/CFT control activities on behalf of the Central AML/CFT Department, including statistical information on completion rates. - Publish outcomes of internal AML/CFT controls annually (e.g., via an annual AML/CFT compliance report). - For imposed AML/CFT-related sanctions, consider disclosing the name of the financial institution, details on enforcement actions, and implementation status while allowing case-by-case confidentiality exceptions. - Disclosures regarding the BAM’s ability to communicate on ELA provision should be published to enhance transparency. ### Consumer protection and dispute resolution - Findings - The Banking Supervision Report discloses measures taken concerning credit institutions and similar entities and documents several supervisory/regulatory actions enacted over the last two years, including: - Audit during the crisis regarding application of terms on postponement of credit deadlines decided by the Economic Monitoring Committee; BAM called on banks to harmonize media used to request deferment and options for duration and amount of instalment. - Efforts to enhance accessibility of information about costs of banking services via digital channels; banks invited to provide pricing guides and summary of annual fees through web and mobile applications. - Actions addressing illegal advertising practices, urging consumer credit companies to comply with Article 76 of Law 31-08 on consumer protection. - Requests to ensure banking documentation for customers is translated into Arabic. - Two regulatory texts in 2019 on banking mobility to boost competition and enhance releases on bank guarantees. - Published guidelines regarding fair treatment and conduct of business: - Circular No. 23/G/2006 of 4/12/2006. - Circular No. 3/G/10 of 03/03/2010. - Circular No. 15/G/16 dated 18/07/2016. - Directive n°5/G/2019 and Directive n°4/G/2019. - Dispute settlement mechanisms published: - Circular n°10/G/16 on handling customer complaints. - Circular n°9/G/2016 on banking mediation mechanism. - Complaint channels: - Generic address on BAM website; postal address; filing with BAM agencies across the kingdom forwarded to the DSP. - The BAM publishes didactic guides (3) on “processing of complaints”, “banking mobility”, and “the issuance of releases on securities guaranteeing bank credit”; broadcasts a radio debate and awareness publication on free services. - Assessment / Comments - Grievance mediation mechanism (CMMB) is new and building public confidence; continued dissemination is encouraged. - Recommend development of a specific website or a dedicated digital tab on the BAM’s official website for consumer protection, including links to the Moroccan Foundation for Financial Education and disclosure of financial education actions. - Encourage disclosure of methods to measure satisfaction on consumer protection claims. ### Monetary policy outcome and transparency (Pillar IV) - Governance and accountability (Principle 4.1.1) - Findings - BAM defines transparency on its website and makes financial statements public. - Article 45 of BAM’s statutes: the Governor is heard by parliamentary standing committee(s) in charge of finance. - Annual Report includes a box assessing inflation and growth projections and explaining deviations. - Presentations by the Governor to parliament are published; examples: Presentation of October 14, 2015; most recent Presentation of February 15, 2022. - Quarterly MPR is the main vehicle for dissemination, assessing recent economic developments, inflation, economic activity, and providing analytical explanations about monetary policy decisions. - Assessment: Comprehensive. - Policies and forecasts (Principle 4.1.2) - Findings - BAM has not disclosed a numerical inflation objective but discusses outcomes relative to a price stability objective. - Annual Reports detail the four decisions of the BAM’s Board for the year and discuss expected evolution of inflation. - Annual Report contains a Box evaluating inflation and growth forecasts. - Quarterly MPR includes sections: inflation trends, short-term outlook (core and headline), inflation expectations (from BAM survey), Medium-term outlook, Underlying assumptions (global outlook, central banks’ actions, commodities prices, cereal production). - BAM’s website describes the monetary policy forecasting framework and fan charts; detailed model specifications are disclosed (see Principle 2.1.3). - Assessment: Comprehensive. - Operations and operational data (Principle 4.1.3) - Findings - Operational target (overnight money market weighted average rate) published daily on BAM website. - Outstanding volumes and auction results (amounts requested and amounts served) published timely. - Aggregated bank balances with BAM and aggregate reserve requirements published daily; autonomous liquidity factors published in quarterly bulletin. - MPR provides information on banks’ liquidity needs and BAM interventions. - Assessment: Comprehensive. ### Foreign exchange management and FX transparency (Principles 4.2–4.3) - Institutional responsibilities - Findings - Office des Changes (under Ministry of Economy and Finance) defines, implements, and enforces foreign exchange regulations and licenses/supervises money changers. - BAM’s statutory responsibilities include implementing exchange rate policy defined by Government and advisory role; detailed in Annual Report (page 168 in 2020 Annual Report) including MFC’s responsibility for monitoring FX market and approving intervention. - Assessment: Not Applicable for Office des Changes; Expanded for FX governance disclosures by BAM. - Comments: Additional disclosure on MFC’s role and the intervention budget recommended; suggest updating the website section on the reform of the exchange rate regime. - Policy role and operations (Principles 4.3.1–4.3.3) - Findings - Educational videos on website explain role of FX management toward price stability, exchange rate regimes, and reform toward inflation targeting. - FX interventions are intended to preserve fluctuation bands within FXI intervention budget. - BAM systematically publishes information on interventions in domestic FX market via auctions and monthly OTC FX interventions. - Assessment: Expanded (governance actions); Comprehensive (operations). - Comments: Accessibility enhanced by a dedicated website section on FX policy design and implementation; disclosure of government-related FX interventions recommended when confidentiality allows. ### Foreign exchange reserve management and reporting (Principles 4.4.1–4.4.3) - Findings - Since 2020, BAM adopted Official Reserve Assets (ORA) as sole reference indicator; see Press release of May 22, 2020. - Weekly data on ORA published on website; monthly ORA, other external assets, and external liabilities on non-residents published on the 30th day after the end of the reference period in monetary statistical series (9 - Net claims of IDs on non-residents). - BAM produces ORA statistics in accordance with IMF’s SDDS (subscribed in 2005); data template for international reserves and foreign currency liquidity published on the 30th day after the end of the reference period (Tables I–IV). - Advance Release Calendar includes release dates for weekly ORA and monthly International reserves and foreign currency liquidity data. - 2020 Financial Statements provide information on amount and composition of FX reserves and detailed explanations on results from reserves management (P. 205; P. 220-221). Note 3.2.8 on Financial Risk Management contains information on financial risk categories. - Assessment - 4.4.1: Core — objectives, Board responsibilities, and broad policy principles disclosed; annual foreign exchange investment policy not disclosed; no public evaluations of strategic/tactical allocation changes. - 4.4.2: Comprehensive — statistics published per SDDS template with predefined release calendar. - 4.4.3: Core — clarity on amount, composition, profit/loss; disclosures lack detailed quantified exposures, eligible counterparties, permissible limits, mitigations, benchmarks, and portfolio performance. - Comments / Recommendations - Publish annual foreign exchange investment policy and evaluations of strategic/tactical asset allocation changes. - Expand disclosures in audited financial statements to include developments in exposures to risk categories, eligible counterparties, permissible limits, mitigations, benchmarks, and portfolio performance. ### Macroprudential policy and financial stability (Principles 4.5 and 5.2.3–5.2.4) - Findings - Law 103-12 assigns the main mandate for macroprudential surveillance to the CCSRS, chaired by the Governor of Bank Al-Maghrib and comprising Ministry of Finance and other regulators. - CCSRS coordinates macroprudential policy actions and oversees implementation; Article 10 of BAM statutory law 40-17 mandates BAM to contribute to financial stability via CCSRS chairmanship. - FSR (Financial Stability Report) elaborates intermediate objectives for macroprudential policy; CCSRS press releases communicate actions (e.g., June 2020). - BAM and other authorities indicate positive effects of measures taken in response to the Covid-19 pandemic. - Decree No. 2-17-32 (14 September 2017) establishes CCSRS procedures; Article 5 requires internal operating rules not publicly disclosed. - Financial Stability section on BAM website details conceptual and institutional frameworks; outcomes are reported in FSR. - Assessment - 4.5.1: Core — legislation and mandates disclosed. - 4.5.2: Core — authorities publish statements on macroprudential effects but ex-post evaluations of individual tools not publicly available. - 5.2.3 / 5.2.4: Expanded — legal mandate, press release practice, and reporting in FSR provide transparency on interagency arrangements and outcomes. - Policy recommendations - Publish internal operating memorandum/rules of procedure of CCSRS (Article 5 of Decree 2-17-32) to clarify interaction and information exchange. - Publish ex-post evaluations of specific macroprudential tools and the methods, techniques, and data underlying evaluations when available. ### Emergency Liquidity Assistance (Principle 4.7) - Findings - BAM’s internal Instruction on ELA provision exists but is not disclosed on the BAM’s website. - The Instruction specifies BAM can communicate about ELA provision if it deems necessary. - Assessment: Not Implemented. - Recommendation: Publish the policy on ability to communicate ELA provision to enhance transparency while preserving necessary confidentiality. ### Central bank relations with government and domestic agencies (Pillar V) - Institutional relationship with government (Principle 5.1.1) - Findings - BAM Statute sets administrative autonomy (Article 1), prohibition on seeking/accepting instructions (Article 13), incompatibility of Governor/Director positions with government functions (Article 38). - Government represented on Bank Board (Treasury and External Finance Department and Government Commissioner; Article 26). Minister of Finance interacts regularly with Governor (Article 6). - BAM holds monthly meetings with Treasury and External Finances Department to exchange information. - BAM implements FX policy as part of government regime, giving advice (Article 11); Office des Changes executes FX regulations. - BAM has leadership role on national financial inclusion strategy and is financial advisor to Government (Article 15). BAM sends an annual letter to the Minister of Finance per Charte de Gouvernance de Bank Al Maghrib (Article 2). - Assessment: Core. - Comments / Recommendations - Disclose regular exchanges, coordination, and formalize framework for exchanges with Department of Treasury and External Finance. - Explain day-to-day interactions with Office des Changes and clarify the advisory role in FX matters. - Consider expanding disclosure of the Annual Letter to the Minister of Finance or elements relevant to the public. - Terms, conditions, and operations with government (Principle 5.1.2–5.1.4) - Findings - BAM is Treasury’s financial agent and provides public debt management (Article 16); information is confidential unless Treasury publishes it. - Financial services rendered are remunerated up to expenses incurred (Article 17); Treasury receives balance of net profit (Article 48). - Bank not allowed to guarantee State commitments or acquire State debt securities except conditional capped discretionary overdraft (Article 69). - Monthly comparative accounting statement submitted to Minister of Finance (Article 48). - Disclosure of outcomes with government appears in financial statements, Annual Report, and MPR; specific items in 2020 Annual Report: balance of current account of public Treasury (p. 208, 229); current account remuneration terms referring to 2009 agreement (P. 228). - Assessment: Core. - Comments - Enhance transparency by linking complementary legislation (e.g., Law No. 19-06) and disclosing terms/conditions of interactions with public financial agencies. - Disclose bilateral agreements/arrangements and formal terms where feasible. - Relationships with domestic financial agencies (Principles 5.2.1–5.2.2) - Findings - Relationship with ACAPS, AMMC, and Ministry of Finance regulated by Banking Law (Law 103-12); CCSRS powers and procedures set out in Articles 108 and 111 and Decree No. 2-17-32. - Article 111 provides for exchange of information among coordination committee members. - Modalities for anti-corruption collaboration and other cooperation are set out in agreements that are not published; press releases are issued when agreements are signed. - Assessment: Core. - Comments / Recommendations - Publish bilateral and multilateral agreements/MoUs (after consultation with counterparts) and provide an index of agreements with explanations to support Strategic Objective 2 (2019–2023). - Disclose modalities for cooperation and information sharing with AMMC, ACAPS and other national authorities. - Financial stability and interaction outcomes (Principle 5.2.4) - Findings - Financial Stability Report discloses decisions, actions, and arrangements taken by BAM and other partners under CCSRS. - Assessment: Expanded. - Recommendation: Disclose internal rules of procedure to clarify roles and decision stages for restoring/maintaining financial stability. ### International relations and other relations (Principles 5.3–5.4) - Foreign agencies and international cooperation (Principle 5.3) - Findings - Articles 18–20 of BAM statutes define cooperation with international agencies, representation in international institutions (Article 18), participation in external borrowing agreements (Article 16), and execution of international agreements (Article 19). - Bank’s subscriptions in international institutions’ capital detailed in annual report; 2020 Annual Report (p. 206-207) highlights achievements in cooperation. - Press releases published after signing agreements; examples of central bank counterparts include Central Bank of West African States, Spain, Djibouti, Palestine, Portugal, Tunisia, Mauritius, Hungary. - Agreements with foreign institutions are not disclosed. - Assessment: Core. - Recommendations - Disclose general policies on international interactions and publish agreements when appropriate and possible per counterpart consent. - Explain co-decision modalities and ad-hoc informal information-sharing arrangements where relevant. - Participation with private or semi-public institutions (Principle 5.4) - Findings - Articles 23 and 76 govern participation in capital of national/international organizations. - Note 6 of 2020 Annual Report (Part 3, p. 225-226) discloses gross book value, net book value, share, and net position of participations; accounting rules for valuation and provisioning presented. - Statement B3 of ETIC (additional information) relates to Bank’s holdings and is included in external auditor’s annual report. - Assessment: Expanded. *Source: 1marea2022002 — https://www.imf.org/-/media/files/publications/cr/2022/english/1marea2022002.pdf* ### Appendix I. Authorities’ Response to Detailed Review ### Appendix I. Authorities’ Response to Detailed Review ### Overview and context - Bank Al-Maghrib (BAM) participated voluntarily in the pilot implementation of the Central Bank Transparency (CBT) Code adopted in July 2020. - A virtual IMF multidisciplinary mission reviewed BAM’s transparency framework from March 23 to April 7, 2022, through in-depth discussions with the Board, concerned departments, and main stakeholders. - The mission is part of BAM’s five-year plan 2019-2023 and supports consolidation of the Bank's transparency framework after the 2019 amendment of the Bank’s Statutes and Morocco's transition to a more flexible exchange rate regime and preparatory process for an inflation targeting framework. - The mission assessed the CBT’s five pillars: Governance, Policies, Operations, Outcome and Official Relations, and concluded that “Bank Al-Maghrib has implemented expanded and comprehensive transparency practices in a number of areas, notably related to the primary mandate of price stability and shared mandate of financial stability. [...] This level of transparency enabled the BAM to gain the noteworthy trust of the stakeholders met by the mission and to safeguard its autonomy”. ### Roadmap, monitoring, and classification of actions - Eleven key recommendations were formulated by the mission, covering the Code’s five pillars. - Some recommendations (e.g., risk management and external audit) have already been implemented. - Remaining recommendations have been included in a roadmap to be regularly monitored by a dedicated governance body within the Bank. - Actions in the roadmap are classified as: - "Immediate implementation" — mainly disclosure of additional information and pedagogical explanations to enhance public understanding and accessibility (e.g., legal nature, foreign exchange policy, foreign exchange reserves management). - "Implementation subject to further analysis" — recommendations requiring benchmarking and analysis considering the Bank's environment, legal framework, strategic roadmap, and approval of relevant external parties (e.g., dissemination of key debates and publication of institutional cooperation agreements). ### Mission findings (selected) - Governance pillar: “the BAM's disclosure practice regarding its governance structure and framework is robust.” - Policies, Operations, Outcome pillars: - “the BAM has in place a comprehensive transparency framework for its primary monetary policy mandate.” - “the BAM’s actions to fulfill its statutory responsibility in exchange rate policy are appropriately disclosed.” - “The framework for macroprudential policy and financial stability monitoring is well-disclosed.” ### Eleven key recommendations and BAM’s response 1. Legal Framework - Immediate implementation: - Update the educational content on the Bank’s website to better explain the legal nature of Bank Al-Maghrib. - Publish additional explanations on judicial control of BAM’s decisions and legal protection of its officials on the website. - Implementation subject to further analysis: - Consider, based on a benchmark analysis, completing a didactic document further explaining its missions and the associated objectives. 2. Risks Management - IMF recommendations included: (i) a risk statement and information on developments of key risks; (ii) a high-level overview of key risks mapped to BAM’s mandate and mitigation measures; (iii) information about the Risk and Compliance Committee and the Internal Coordination and Management Committee (composition, powers, roles, responsibilities, and interaction with the Audit Committee). - Immediate implementation (actions completed or in progress): - A description of the process and approaches to manage financial and non-financial risks (by category) is presented on the Bank’s website: https://www.bkam.ma/A-propos/Gouvernance/Gestion-des-risques-et-continuite-d-activitesis - Composition, roles, responsibilities of all Bank Committees and interaction with the Audit Committee were published in the organizational chart section: https://www.bkam.ma/A-propos/Organisation/Organigramme - Implementation subject to further analysis: - A high-level overview of key financial and non-financial risks and mitigation measures will be presented in the Bank’s annual report of 2021. 3. Accountability Mechanisms (external audit and publication practices) - Immediate implementation (actions completed or in progress): - Selection and independence criteria of the external auditor and auditing standards applied were published under “Supervisory bodies”: https://www.bkam.ma/en/About-us/Governance/Supervisory-bodies/ - These criteria will also be included in the annual report for 2021 (part II). - Financial statement issuance practices published on the website, specifying: “The Bank's financial statements are posted on its website no later than May 31 following the end of the fiscal year in review and are published in the Part III of the Bank's Annual Report, governed by Article 50 of its Statute.” https://www.bkam.ma/en/About-us/Financial-statements/Summary-statements/ - No additional items listed under “Implementation subject to further analysis” for this recommendation. 4. System of Institutional Communications - Immediate implementation: - A global policy formalizing communication objectives, targets and channels is being finalized and will be published on the Bank’s website. - Bank Al-Maghrib communicates through website and social media; handles annually more than 200 media requests and sends a special mailing regularly to media. - The Bank will set specific guidelines to improve turnaround times for media inquiries. - The Bank’s communication strategy is derived from its global strategy plan and shared internally with a dedicated annual roadmap. - Implementation subject to further analysis: - The Bank will study the opportunity to publish the communication strategy on its website based on a benchmark analysis. 5. Financial Integrity (AML/CFT) - IMF recommendations included disclosure of: (i) detailed information on internal AML/CFT control activities including statistical completion rates; (ii) annual outcomes of internal AML/CFT controls, oversight and effectiveness; (iii) information related to independent auditing of AML/CFT internal control policies and activities. - Immediate implementation (actions completed or in progress): - Internal AML/CFT activity is subject to independent internal auditing based on a risk approach. - The Bank mentions audit engagements in its annual report, including those related to AML/CFT activity; main internal audit findings and follow-up are shared with the Audit Committee. - The Bank provides a global description of its internal AML/CFT activity on its website. - A detailed description of developments relating to the Bank’s internal AML/CFT system will be presented in the 2021 annual report. - An internal report provides AML/CFT qualitative and quantitative indicators on compliance; reference is made to this report on the website. - Implementation subject to further analysis: - Disclosure of statistical data is currently restricted by articles 15 and 29 of law n°43-05 relating to AML/CFT and article 15 of law n°22-01 relating to penal procedure. 6. Confidentiality Framework - Immediate implementation: - As per law n° 31-13, the internal system describing rights and the process for accessing information held by BAM is published on the Bank’s website: https://www.bkam.ma/Trouvez-l-information-concernant/Droit-d-acces-a-l-information-loi-n-31-13 - Implementation subject to further analysis: - An explanatory description of BAM’s practices for classifying information assets will be published on the Bank’s website. - An educational document describing the privacy and proactive publication policy followed by BAM, with relevant legal and regulatory references, will also be posted. 7. Monetary and Foreign Exchange Policy and Operations - IMF recommendations included: (i) consider publishing minutes of BAM Board meetings or disclose main discussions supporting monetary policy decisions; (ii) add a website section on design and implementation of foreign exchange policy; (iii) disclose key elements of the annual letter sent to the Minister of Economy and Finance on BAM’s advisory role for the exchange regime. - Immediate implementation (actions completed or in progress): - Explanatory description of the history of the exchange regime and its recent reform is published on the bank's website: https://www.bkam.ma/Trouvez-l-information-concernant/Reforme-du-regime-de-change/Historique-du-regime-de-change and https://www.bkam.ma/Trouvez-l-information-concernant/Reforme-du-regime-de-change/Mise-en-oeuvre-de-la-reforme - The advisory role of BAM with regard to Morocco’s foreign exchange regime and policy will be displayed on the website. - Implementation subject to further analysis: - The Bank is considering, based on a benchmark analysis and Moroccan context specificities, summarizing analyses and discussions underlying monetary policy decisions based on Board minutes. 8. Financial Stability and Stress Testing - IMF recommendations included: (i) define and disclose operational modalities for activation of the ELA framework; (ii) disclose further details about analytical methods and underlying data for financial stability assessments; (iii) publish further details about stress testing methods, results, and use in policy formulation. - Immediate implementation (actions completed or in progress): - The current ELA framework is briefly described in the financial stability section: https://www.bkam.ma/fr/Stabilite-financiere/Cadre-analytique/Cadre-de-resolution-de-crise - The revised ELA framework following the new Bank Statute will be completed once the decree setting conditions for granting the state guarantee for providing ELA is finalized and disclosed; after publication, other key terms of the ELA framework will be disclosed. - Disclosure of more details on analytical methods and underlying data used for financial stability assessments will be made as part of the next issue of the Financial Stability Report to be published in July 2022. - The section of the Financial Stability Report relating to the methodological/analytical framework and results of the macro stress test will be more detailed in the next issue (July 2022). 9. Macroprudential Policy - IMF recommendations included: (i) publish minutes of CCSRS policy deliberations (redacted) or disclose main discussions; (ii) publish ex-post evaluations of policy actions; (iii) institute a customary process of public consultation prior to implementing new macroprudential tools or major design changes. - Immediate implementation (actions completed or in progress): - Deferred publication of redacted minutes of CCSRS meetings will be examined taking into account benchmark analysis and Moroccan specificities. - Some macroprudential instruments were not activated given the downtrend financial cycle and pandemic (e.g., Countercyclical Capital Buffer, Systemic surcharge for Domestic Systematically Important Banks, Loan-to-Value Cap). Ex-post evaluations of these instruments will be made after activation. - The temporal relaxation of the Capital Conservation Buffer (CCoB) by 50 basis points until June 2022 will be subject to an ex-post review in coordination with the banking supervision department. - The existing process for drafting regulatory texts includes a consultation phase with the banking profession prior to adoption. - Implementation subject to further analysis: - The possibility of setting up a public consultation process before implementing macroprudential tools or making major changes will be examined, upon consultation with the General Secretariat of the Government, based on benchmark analysis, Moroccan specificities and legal constraints. 10. FX Reserves Management - IMF recommendations included: (i) enhance disclosures on framework, policy objectives, investment and risk constraints, benchmarks and oversight; (ii) disclose methods for reaching investment and risk decisions with supporting analysis. - Immediate implementation (actions completed or in progress): - Information on applied methods for reaching investment and risk decisions along with supporting analysis will be disclosed in the Bank’s 2021 annual report. - Implementation subject to further analysis: - Creating a specific section on FX Reserves Management on the BAM’s website is currently examined, along with its other mission. 11. Official Relations - IMF recommendations included: (i) explain BAM’s official relations with the Ministry of Finance and other government bodies and, if possible, disclose terms and conditions of agreements; (ii) disclose and explain the BAM’s advisory role on foreign exchange policy; (iii) disclose international cooperation efforts with detailed information accessible to the public, possibly in a dedicated website section. - Immediate implementation (actions completed or in progress): - Official relations with the Ministry of Finance are broadly explained in the Bank’s Governance Charter (Article 2), in reference to Article 6 of the Statute; the Charter is published on the website. - The Bank publishes communiqués on each cooperation arrangement, agreements, and other relations (reflecting objectives and scope). - Implementation subject to further analysis: - Opportunity to further detail and formalize the framework of exchanges between BAM and the Department of Treasury & external finance will be considered. - The advisory role of BAM with regard to Morocco’s foreign exchange regime and policy will be explained on the website. - The Bank is considering disclosing cooperation arrangements upon agreement with counterparts. ### Next steps and institutionalization - BAM has noted the Fund experts’ areas for improvement and integrated them into its strategic roadmap and CBT self-assessment follow-up. - The Bank plans to include a comprehensive and systematic review of its transparency framework at regular intervals in line with its strategic cycle. - A dedicated governance body within the Bank will regularly monitor roadmap implementation. *Appendix I. Authorities’ Response to Detailed Review* --- _Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1marea2022002.pdf_