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The Financial Stability Council (FSC) was established under the Financial Stability Council Law (OGM 44/10) enacted in July 2010 and it started operating in October that year. Its adoption was notably important for creating an institutional work for financial stability in Montenegro. Its adoption was notably important for creating an institutional work for financial stability in Montenegro. The FSC’s objective is to contribute to financial stability through monitoring and timely identifying systemic risks in Montenegro’s financial system. To foster the entire financial system’s resilience, efforts are made to recognise risks and potential instability in the early phase so that all competent authorities can react by taking regulatory, supervisory, and other policies and measures under their competence.

The FSC members are:

1. The Governor of the Central Bank of Montenegro, the Council Chair, Ms Irena Radović; 
2. The Minister of Finance, Mr Novica Vuković;
3. The President of the Council of the Insurance Supervision Agency, Mr Željko Drinčić;
4. The President of the Capital market Authority, Mr Marko Ivanović.

The Council meetings may be attended by representatives of the state bodies and organisations or certain professionals in specific areas, upon invitation, with a prior approval of the majority Council members.

The Director of the Deposit Protection Fund has been attending regularly the Coucil meetings since 2018

Under the Law, the FSC is responsible for:

1. collecting and analysing data and information of importance for the financial system stability and a potential financial crisis management;
2. ensuring coordination and exchange of data and information among the competent authorities;
3. assessing and identifying threats to the financial system and/or the financial system vulnerabilities; 
4. identifying risks in the financial system and determining their impact on the financial system stability;
5. determining the contingency plan for financial crisis at the financial system level and organising stress testing and financial crisis simulation exercises;
6. monitoring the financial system development;
7. monitoring best practices with a view to adopting regulatory standards in the financial system areas.

With the view to preserving the financial stability, the SFS member institutions exchange information and ensure coordination and their full cooperation so that they can individually, as efficiently as possible, implement the necessary activities aimed at preventing or mitigating systemic risk in the financial system of Montenegro as a whole within their competence.

According to its structure, the financial system includes a number of interconnected components: infrastructure (legal system, payment system, accounting system, etc.), institutions (banks, non-bank financial service providers, payment service providers, insurance companies, capital market intermediaries, institutional investors, etc.) and markets that are interconnected by transmission channels. In its work, SFS analyses all the mentioned components and in case of identifying a potential problem, and takes activities to prevent the development of risk and its possible further spread.