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CBM policy for 2019

Pursuant to Article 44 paragraph 2 item 1 of the Central Bank of Montenegro Law (OGM 40/10, 46/10, 6/13, 70/17), at its meeting held on 27 November 2017, the Council of the Central Bank of Montenegro adopted the following


I. In line with its constitutional responsibilities and statutory obligations and accountability for monetary and financial stability and the banking system functioning, and adhering to the principles of transparency and independence, in 2019, the Central Bank of Montenegro (CBCG) will:

  1. with a view to strengthening the complete financial system, primarily by improving the banking sector’s stability and soundness, timely identification and minimizing adverse effects and risks, follow the policy of monetary and financial stability using all available instruments and measures within its competence. In addition, with a view to fostering and preserving monetary stability, it will pursue the reserve requirement policy based on the assessment of effectiveness and efficiency of the applicable solutions and - if required - implement other monetary policy instruments. It will also analyse and forecast inflation trends in the country. With a view to fostering and preserving of the financial stability, it will improve indicators assessing the financial stability and combating systemic risks, develop macro-prudential policy instruments, and improve the framework for acting during a financial crisis. It will also comply the solutions of the Contingency Plan under the CBCG competence with the amended regulatory framework and initiate the amending of the National Contingency Plan. With the aim of fostering and maintaining the banking sector stability, it will continue to monitor and analyse the situation in the banking sector, test the banking sector’s resilience to potential shocks from macro-economic environment, and, if necessary, take corrective actions. It will improve risk management process in banks, and continue the implementation of the relevant internationally accepted standards and principles in this area. It will carry out macro stress tests aimed at testing the banking system resilience to potential macro shocks. It will cooperate intensively with other financial system regulators in the country and with relevant international regulators and other institutions dealing with financial stability. Attention will be paid to monitoring, supervision and analysis of financial services provided by micro-credit financial institutions, leasing and factoring companies, companies for purchase of receivables, and the Investment and Development Fund. It will continue cooperating with international institutions on combating money laundering and terrorist financing, in parallel with the strengthening of mechanisms and procedures necessary for successful implementation of this process. It will develop cooperation with supervisors of foreign parent banking groups having subsidiaries operating in Montenegro, as well as with key international financial institutions such as the World Bank, the European Bank for Reconstruction and Development (EBRD), the European Central Bank (ECB), and the European Banking Authority (EBA) with a view to synchronising supervisory activities. It will monitor and implement improvements based on international multilateral agreements and adopted conventions in banking.

  2. support the pursuit of the economic policy of the Government of Montenegro (to the extent that will not jeopardize the attainment of the objectives, constitutional responsibilities, and independence of the CBCG) by implementing measures and instruments contributing to economic recovery, increased employment and competitiveness, in the function of maintaining financial stability and fostering economic growth and development. Moreover, with a view to creating reliable macroeconomic forecasts, it will monitor and analyse macroeconomic indicators in Montenegro, countries of the region, the EU, and globally.

  3. maintain a sound, efficient, and operating payment operations and improve it through its aligning with the new acquis communautaire, new technologies (Fintech), the implementation of international standards, principles and best practice in the functioning of the modern payment systems and payment operations in general. It will improve the quality of providing payment operations services in Montenegro and efficiently supervise the provision of payment operations. Moreover, it will improve the quality of payment systems in Montenegro through the implementation and the ongoing development of payment system oversight.

  4. implement activities aimed at efficient and quality managing of international reserves in the situation of still negative interest rates at the international financial market (in euros). It will provide quality performing of the task of depositor, banker and fiscal agents of public authorities and institutions, constantly monitoring the needs and requirements. It will perform international payment operations in an efficient and quality manner, following the principles governing modern payment systems. It will continue to reposition the financial instruments in the portfolio, and consider the possibility of introducing new ones, while investing the funds into safe and liquid instruments taking into account the profitability of the placement. It will continuously monitor the situation in the international financial market and timely adjust its investment policy, and continuously monitor and analyse the financial position and rating of banks and issuers, existing and potential partners, and timely channel funds to entities that contribute to an improvement in investment risk to return ratio. It will revise the existing risk management and consider possible improvements. It will improve the existing or develop a new reporting system to the CBCG with a view to comprehensive analysing the needs and planning optimum quantities and denomination structure of cash necessary for regular and timely supply of the domestic payment system. It will continue to protect euro from counterfeiting and, to that end, it will continue cooperating with foreign entities and domestic public authorities engaged in the protection of euro from counterfeiting (the ECB, the European Commission (EC), the European Technical and Scientific Centre (ETSC), the Supreme State Prosecutor’s Office and the Police Administration). It will continue to provide necessary infrastructure for the needs of operations of national centres for the protection of euro from counterfeiting, and continue cooperation with the Police Administration and the Supreme State Prosecutor’s Office and with all cash handlers in Montenegro.

  5. improve statistics for which it is an official provider. It will start testing the new bank reporting system to the CBCG for the needs of improving monetary and financial statistics of monetary financial institutions. It will also develop new statistical reviews based on the new bank reporting system. Moreover, it will create reporting requirements for other financial institutions not subject to CBCG supervision (investments funds, insurance companies, etc.) for compiling the financial sector’s financial account. In addition, it will develop statistical reviews for other financial institutions subject to the CBCG supervision, such as leasing and factoring companies, and companies for purchase of receivables. It will also fully align the Financial Soundness Indicators (FSI) statistics with the relevant methodology of the International Monetary Fund (IMF).

  6. continue active participation in Montenegro’s negotiation process with the EU, strengthen cooperation with the ECB, the EC and other relevant institutions of the European Union, and intensify cooperation with central banks and other international financial institutions and organisations, particularly the IMF and the World Bank. It will continue with the active participation in the negotiation structures and working groups for Montenegro’s accession to the EU for chapters under the CBCG competence and continue regular activities on the fulfilling of obligations from the Stabilisation and Association Agreement (SAA), and Montenegro’s Programme of Accession to the European Union 2019-2020. Moreover, it will continue to participate in the coordination and preparation of the national Economic Reform Programme for Montenegro (ERP). It will also continue to cooperate with other international institution with which it has established cooperation (the EBRD, the European Investment Bank (EIB), the Governors’ Club of the Central Asia, Black Sea Region and Balkan Countries, the Bank for International Settlements (BIS), etc.).

  7. continue to improve its staffing structure and invest into the education of its staff with a view to acquiring qualifications, skills, and know-how necessary for the pursuit of the CBCG functions;

  8. adhering to the highest transparency standards, continue providing with timely, reliable and relevant information about all aspects of its operations. It will support raising awareness and economic knowledge in the society, with a view to improving better understanding of central banking, the importance of the financial stability, and banking system soundness. It will pay special attention to intensifying projects in financial education and financial inclusion such as the “Savings Week” and the “Finance Week”. Moreover, it will continue promoting and raising the level of economic knowledge through integration in the educational system to be achieved with the participation of the CBCG representatives as guest lecturers at universities, organisation and providing assistance in economic research, rewarding of the best pupils and students, graduate students, and holders of MSc and PhD degrees.

  9. carry out activities on rational collecting of museum material for the purpose of completing the numismatic collection, primarily the collection of the Montenegrin money, the Perper, with a view to preserving, protecting and maintaining the historical and cultural numismatic heritage in Montenegro. Moreover, it will promote the Money Museum as the institution of cultural and historical importance and an institution significant for educating the public and promoting the role and importance of the CBCG in the Montenegrin financial system.

  10. continue to develop other areas of importance for the attainment of its objectives and the exercising of its functions, such as the information system development, improving operational risk management systems, information safety, business continuity, and the like. It will pay special attention to improving information security system in the CBCG, in line with the ISO/IEC 27001 standard and good practice in this area and continue activities on establishing the management system for business continuity in the CBCG, in line with the ECB/ESCB framework, the ISO 22301 standard and good practice in this area.

  11. base its operations following the principles of a socially responsible institution, both regarding its employees and the society as a whole. Accordingly, it will endeavour to adopt, promote and apply in its operations ten universal principles of the protection of human and labour rights, environmental protection, and combating corruption defined in the United Nations Global Compact. In accordance with its financial possibilities, it will continue contributing a portion of its revenues to charity and support of the development of cultural, historical and other values of the society, thus contributing to the strengthening of civil society through public participation in numerous social activities and events.

II. This Policy shall be published on the website of the CBCG.


Dec. no. 0101-9086-4/2018


Podgorica, 27 November 2018


Radoje Žugić 


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