The independence of a central bank is a fundamental precondition for successful monetary policy pursuing.
It means existence of a large degree in freedom when deciding in pursuing monetary policy. Increased central bank independence primarily refers to its protection from political pressures connected to the election cycles.
The independence of a central bank may be: functional, institutional, personal (and financial.
The principle of independence of the CBCG was implemented to a large extent in the Law on the Central Bank of Montenegro of July 2010. However, the principle of independence of the CBCG was implemented in full with the adoption of the Law Amending the Central Bank of Montenegro Law adopted by the Parliament of Montenegro on 16 October 2017. This principle was implemented in full in the manner given in the recommendations of the European Commission Screening Report for the Chapter 17 - Economic and Monetary Policy of 7 May 2014. Central Bank of Montenegro Law (˝Official Gazette of MNE“, nos. 40/10, 46/10, 6/13, 70/17)
With regard to the functional independence, the CBCG has at its disposal all instruments and powers needed to enforce monetary policy within the current monetary regime in Montenegro. The CBCG is independent in passing decisions on using the monetary policy instruments. The Law amending the Central Bank of Montenegro Law explicitly determines that the maintenance of price stability will be the main objective of the CBCG as of the day of Montenegro’s accession to the European Union.
The principle of institutional independence of the CBCG is consistently applied in practice, and the Law amending the Central Bank of Montenegro Law additionally strengthened this principle by incorporating the provision that other bodies and institutions, except courts, may not approve, cancel, annul or in any other way affect any decision within the CBCG’s authority.
The principle of personal independence was implemented in the provisions of the Central Bank of Montenegro Law that prescribe that the term of office of the Governor, Vice-Governors and other Council members is for period of six years. The term of office of a Council member appointed to replace the Council member who has been relieved of duty before the expiry of his/her term of office lasts six years. A member of the Council is relieved from office before the expiry of his/her term of office if he/she longer fulfils the conditions required for the performance of his/her term of office or he/she has been guilty of serious misconduct in the performance of his/her duty. The Governor, Vice-Governors and other members of the Council may institute an administrative dispute against the decision on relieving from office before the Administrative Court. As of the day of Montenegro’s accession to the European Union, the Governor who has been relieved from office will have the right to refer the decision of his relieved to the Court of Justice of the European Union.
With regard to financial independence, the CBCG is independent in managing appropriate assets needed for exercising its tasks in an adequate manner.