Morocco Strengthens Banking Legislation to Prevent Systemic Failures

Morocco has bolstered its legislative arsenal to better anticipate and manage bank failures, particularly those deemed systemic.

The Chamber of Representatives adopted a banking reform bill on Tuesday, aimed at enhancing the country's ability to prevent and proactively manage risks faced by banks, especially those with a systemic character.

The reform bill, which was adopted with 66 votes in favor and 28 against, modifies existing laws governing credit institutions and the status of Bank Al-Maghrib.

The bill's introduction was made by Azzedine El Midaoui, Minister of Higher Education, on behalf of the Minister of Economy and Finance.

The bill aims to strengthen the prevention and proactive management of risks to which banking institutions are exposed, particularly those with a systemic character, whose potential failure could threaten the stability of the entire financial system.

The minister emphasized that this bill is a crucial component of the existing legal framework, providing for more effective early intervention mechanisms and legal and regulatory tools to enable competent authorities to preserve sector stability and ensure continuity of vital functions.

The bill was previously amended by the Finance and Economic Development Commission, which made several notable modifications, including strengthening governance and transparency in the granting and withdrawal of banking licenses, clarifying notions related to systemic risks and financial stability, and defining the role of the Deposit Guarantee Fund as a contributor to the financing of resolution measures through a multi-source approach.

The Moroccan banking sector has been bolstering its resilience in the face of climate-related risks, with Bank Al-Maghrib and the European Bank for Reconstruction and Development (EBRD) playing key roles.

The country's foreign exchange reserves stood at 469.8 billion dirhams at the end of April 2026, while the housing sector has seen significant growth, with 30.6 billion dirhams in outstanding financing for participatory housing at the end of March.

The banking sector has also seen a slight easing of its liquidity deficit, which stood at 148 billion dirhams at the end of March.

In addition, two conventions have been signed to promote amicable dispute resolution between clients and credit institutions.

This development is significant for the Moroccan market today, as it underscores the government's commitment to strengthening the banking sector's resilience and stability.

The reform bill's adoption is a crucial step towards enhancing the country's ability to prevent and manage systemic risks, thereby ensuring the stability of the financial system and maintaining investor confidence.