The CBCG Monetary Policy objectives
In general, there are three approaches to define primary objectives of a monetary policy. The first one starts from the understanding that a central bank should have a sole objective – to maintain price stability. According to the second approach, the bank should have transitional (like currency exchange fixed to the currency exchange of a country with low inflation) or special objectives (such as growth in some of monetary aggregates), while the third approach advocates that the central bank should have multiple objectives, including the price stability. The tendency of including the financial stability as a central bank’s objective has been present in the last several years.
Accoprding to the Law on the Central Bank of Montenegro of July 2010, the CBCG set out the fostering and maintaining the financial system stability and fostering and maintaining a sound banking system and safe and efficient payment systems as its main objective. In addition to the primary objective, the CBCG has also set contribution to achieving and maintaining price stability as an objective. Without prejudice to pursuing its objectives, the CBCG supports the pursuing of economic policy of the Government of Montenegro, acting thereby in accordance with the principles of free and open market and freedom of entrepreneurship and competition. The Law amending the Central Bank of Montenegro Law adopted by the Parliament of Montenegro on 16 October 2017, 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 Central Bank shall, without prejudice to pursuing this objective, support the general economic policies of the European Union with a view to contributing to the achievement of the objectives of the European Union, as laid down in Article 3 of the Treaty on European Union. The Central Bank shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 119 of the Treaty on the functioning of the European Union. The Central Bank shall work on pursuing the objectives and exercising tasks of the ESCB in accordance with the provisions of the Treaty on the Functioning of the European Union, the Statute of the ESCB and of the ECB, provisions of directly applicable EU regulations, and provisions of the Law on the Central Bank of Montenegro. Central Bank of Montenegro Law (˝Official Gazette of MNE“, nos. 40/10, 46/10, 6/13, 70/17)