The idea of establishing the Central Bank of Montenegro (CBCG) emerged in early 20th century. To wit, Crnogorska banka (Montenegrin Bank) was established in Cetinje in 1906 with the idea of becoming the central bank that would assist the development and functioning of the banking industry in Montenegro. It was organised as a joint stock company with the objective to accept money for keeping and to support the development of manufacturing, handicraft, trade and industry by granting loans. However, in his decree as of 11 April 1906, the Prince Nikola authorised the Ministry of Finance, instead of Crnogorska banka, to mint nickel and bronze coins in the equivalent value of 200.000 korona. Hence, this date is nowadays celebrated as the Central Bank of Montenegro Day.

In early May 1909, Prince Nikola passed a Decree on the Issue of Silver Coins. For the first time, the Decree had also included the name of Montenegro's money – the Perper. Silver coins appeared for the first time in Montenegro in 1909, while golden coins appeared in 1910. Montenegro had been using its own currency until the beginning of Austro-Hungarian occupation in 1916, when Austria-Hungary introduced the Austro-Albanian perper printed in the State Print of Vienna.

With Montenegro`s joining the Kingdom of Serbs, Croats and Slovenes in 1918, the National Bank of the Kingdom of Serbs, Croats and Slovenes became an issuing institution. Instead of Perper, Dinar became a new legal tender of the new state. With 1931 amendments to the Constitution, the National Bank of the Kingdom of Serbs, Croats and Slovenes became the National Bank of the Kingdom of Yugoslavia which had 24 branches until the beginning of World War II. After the surrender of Yugoslavia on 29 May 1941, occupational forces liquidated the National Bank of the Kingdom of Yugoslavia, and Banca d’Italia became the issuing bank for Montenegro with the Italian Lira as the legal tender. After Italy surrendered in 1943, the Reich`s Kassen Mark was used in Montenegro. 

During the war, the Presidency of AVNOJ passed the Law on Withdrawal and Replacement of Occupational Banknotes on 5 April 1945. New Yugoslav Dinar banknotes were printed in the USSR and their introduction in circulation lasted from 20 April to 9 July 1945.

The Decree as of 12 October 1946 established the National Bank of the Federative National Republic of Yugoslavia (FNRY), which opened a number of branches. A branch of the National Bank of Yugoslavia was operating in Titograd (Podgorica nowadays) titled as the National Bank of Yugoslavia – Head Office in Titograd.

The 1972 constitutional reform federalised the central banking function. A national bank was established in each republic and autonomous province comprising a complex central banking system together with the National Bank of Yugoslavia. The Head Office in Titograd continued its activities as the National Bank of Montenegro (NBCG), acting as a legal person. Pursuant to the constitutional reform, Montenegro passed the Law on the National Bank of Montenegro in 1977. Since then, the National Bank of Montenegro was an independent monetary institution of Montenegro. It carried out monetary and credit and foreign exchange policies in the territory of Montenegro determined at the federal level. The National Bank of Montenegro had all powers of a central bank except for money issue, and it represented and performed operations on behalf of Montenegro abroad.

The NBCG performed its activities until 1993 when it became a part of the NBY again. The Main republic branch office in Podgorica continued but without the status of a legal person. 

To protect economic interest of Montenegro aggravated by the misuse of monetary policy and the second largest hyperinflation in the world, the Government of Montenegro passed a decision to abandon the use of Dinar and that Montenegro assumed all monetary policy powers. Therefore, the Government passed a decision to introduce a dual currency system on 2 November 1999 with the German Mark and Dinar in circulation. When it was estimated that a sufficient amount of German Marks (DEM) was in circulation, a decision was passed on introducing the DEM as the only legal tender (since 1 January 2001). 

As of March 2002, euro became only legal tender in Montenegro. 

The Central Bank of Montenegro Law was passed in 2000, pursuant to which the CBCG was established in March 2001 as an independent institution of the Republic of Montenegro responsible for monetary policy, establishment and maintenance of a sound banking system and an efficient payment system in the Republic. Although being independent within the powers set forth in the Law, the CBCG did not have an issuing function.

In accordance with the provisions of the first Constitution of independent Montenegro of 2007, the new Central Bank of Montenegro Law was passed in 2010. According to the law, the CBCG became responsible for maintaining the financial system stability, including fostering and maintaining a sound banking system and safe and efficient payment systems. Moreover, one of the CBCG competences was to contribute to maintaining price stability.

The Law Amending the Central Bank of Montenegro Law enacted in 2017 ensured full compliance of the national legislative framework governing the national central bank with the EU acquis communautaire, and it created legal preconditions for the CBCG`s future membership of the European System of Central Banks (ESCB) following Montenegro’s accession to the EU.