The Economic Implications of Algeria’s Digital Currency Ban: Balancing Monetary Sovereignty and Digital Financial Integration

Abstract

This study aims to analyze the economic implications of Algeria's strict policy banning digital currencies against the backdrop of rapid global financial transformations. As digital assets and Central Bank Digital Currencies (CBDCs) increasingly redefine international finance, the study investigates how Algeria’s total prohibition affects its national economy, financial stability, and digital integration. Employing a descriptive-analytical approach, the paper examines the evolving global context, the legal and security rationales underpinning Algerian legislation (notably Article 117 of the 2018 Finance Act and Law No. 25-10 of 2025), and the resulting dual economic outcomes. The findings reveal that while the absolute ban has successfully shielded the domestic banking sector from severe crypto market volatility, speculative fraud, and illicit capital flight, it has also entailed significant opportunity costs. Specifically, the policy has delayed Algeria’s integration into the global digital economy, restricted the benefits of blockchain technology and decentralized finance (DeFi), and unintentionally fueled the expansion of informal peer-to-peer (P2P) shadow markets beyond regulatory control. The study concludes that while prohibition offered vital short-term monetary protection, transitioning toward a regulated framework and exploring a sovereign CBDC represents a more viable strategy to align monetary sovereignty with global financial innovations.