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18/11/2025

European Financial Standards, a Step Forward for Citizens

Through a number of processes, we are strengthening the stability and resilience of the financial system and laying solid foundations for membership in the European System of Central Banks and deeper integration into European financial flows, to the benefit of our economy and citizens

There is a broad consensus among international institutions and the domestic public that Montenegro’s accession to SEPA represents a historic milestone on the country’s path towards full economic and financial integration with the European Union. “This confirms that our payment system operates in line with the highest European standards, and that Montenegro is recognised as part of the European financial community,” says Dr Irena Radović, Governor of the Central Bank of Montenegro. “Institutionally, it means we have fully adopted the European rules of the game, thereby further strengthening trust, stability and the predictability of the business environment – a strong signal to investors and international partners.”

In preparation for SEPA, the CBCG implemented a comprehensive modernisation of the national payment infrastructure, aligning the domestic regulatory framework with SEPA rules and EU legislation. “We have established a new generation of the payment system – RTS/X (with online clearing), which is fully aligned with the international ISO 20022 standard. We have extended system operating hours to 8 p.m., and since 20 October, payment transactions have been processed even on weekends and holidays, ensuring the availability of payment services at the level of the most advanced European markets,” notes Radović.

The next phase is the introduction of a national instant payment system based on the TIPS model in July 2026, in partnership with the European Central Bank and the Bank of Italy. This system, fully interoperable with EU standards, will enable transactions to be executed within seconds, at any time of day, 365 days a year. “We estimate the combined effect of SEPA and TIPS at around €160 million annually, or about 2.3% of our GDP,” says the Governor. “Just as visa liberalisation in 2009 opened borders for the free movement of people, SEPA and TIPS are today opening borders for the free movement of capital and business. Montenegro is gaining a modern, efficient and fully European payment system – a strong foundation for more dynamic economic development, greater competitiveness and investment security.”

How will SEPA and the new payment rules change the functioning of the domestic market, transaction costs and the daily operations of citizens and businesses?

We see SEPA as a strategic reform that improves the quality of life for citizens and strengthens our economy, bringing us closer to European business standards. For citizens, SEPA means that everyday payments become faster, cheaper and more secure. For businesses, especially those operating in international markets, SEPA brings more stable and predictable business conditions, greater competitiveness and the removal of barriers that have so far made them less equal compared to EU-based companies.

Until recently, the average fee for a transfer to the EU was as high as €73.04. Since October, fees have been significantly reduced: free for transfers up to €200, €1.99 for electronic payments up to €20,000, and a maximum of €25 for electronic transfers – resulting in annual savings of over €10 million for businesses and nearly €14 million for citizens and companies combined. Moreover, by extending the payment system’s operating hours, the average transaction time has been shortened by more than ten hours.

What measures is the CBCG taking to strengthen cyber security and protect the payment infrastructure in the context of digitalisation and new risks?

One of the CBCG’s strategic goals is the digital transformation of the financial sector, aligning the regulatory framework in this area with that of the EU. This is most visible through the modernisation of the national payment system, accession to the SEPA zone, the introduction of the TIPS clone instant payment system, implementation of the PSD2 Directive and the development of Open Banking services.

The CBCG pays particular attention to strengthening cyber security and resilience. We continuously monitor and assess risks, strengthen human resources, and enhance processes and technologies, relying on international standards and best practices, as well as support from colleagues at the World Bank and the European System of Central Banks.

The CBCG has adopted a number of regulatory decisions harmonised with the guidelines of the European Banking Authority (EBA), ensuring their implementation through continuous supervision. However, prevention alone is no longer sufficient. Incidents will occur, and the key question is how capable the system is of maintaining operations and recovering quickly. Therefore, our focus is on resilience.

Following the relevant European regulation (DORA), the CBCG has prepared a draft Law on the Digital and Operational Resilience of the Financial Sector. After its adoption, we will prepare secondary legislation in line with the regulatory and implementing standards (RTS and ITS) developed by the European supervisory authorities (EBA, EIOPA and ESMA) for DORA.

As both the operator of the payment infrastructure and regulator, we will continue to serve as a key pillar in protecting the stability, security and resilience of our financial system.

What are the next key regulatory reforms that the CBCG must implement to further align with the European framework and prepare for ESCB membership?

Within the EU accession process, Montenegro has achieved significant progress over the past two years in harmonising its financial system regulation. During 2024, the CBCG, in cooperation with the Capital Market Commission and the Insurance Supervision Agency, prepared and submitted 16 systemic laws for further parliamentary procedure. This marks an essential step towards meeting the final benchmarks in negotiation chapters 4 and 9, bringing our regulatory framework in the areas of banking, payment systems, and anti-money laundering fully into line with the EU acquis.

Furthermore, in March this year, we transposed the rules relating to capital requirements for banks – CRR III, while the new Law on Credit Institutions, through which the CBCG aligned with CRD VI, has already been submitted to the Government for further procedure. This task was completed well ahead of the deadline applicable to EU Member States (10 January 2026). With such an approach, we are demonstrating our seriousness and ability to meet all obligations that EU and ESCB membership entail.

„Our ambition is clear: for Montenegro to be the next EU Member State, with the CBCG fully prepared for its role within the European System of Central Banks”

To ensure operational readiness for ESCB membership, we have launched a Needs Assessment project, which includes a detailed evaluation of the CBCG’s alignment with ESCB and Eurosystem standards. Based on the findings, we will implement all recommendations so that, upon Montenegro’s accession to the EU, the CBCG will be fully prepared to assume all responsibilities arising from ESCB membership. The credibility of this process is confirmed by the fact that it is being led by two renowned Eurosystem central banks – De Nederlandsche Bank and the National Bank of Belgium – with the Bundesbank joining in the second phase.

Our ambition is clear: for Montenegro to be the next EU Member State, with the CBCG fully ready to assume its role within the European System of Central Banks. Therefore, the continuation of regulatory improvements, institutional modernisation and strengthening remain the CBCG’s priorities. Through these processes, we are enhancing the stability and resilience of the financial system and laying firm foundations for ESCB membership and deeper integration into European financial flows, to the benefit of our economy and citizens.

How does the CBCG assess current macroeconomic risks and in what ways can the central bank contribute to maintaining stability in the period ahead?

The main external macroeconomic risk is linked to global uncertainty, driven by geopolitical conflicts and the potential escalation of trade tensions worldwide. The CBCG monitors macroeconomic developments and undertakes measures aimed at preserving the stability of the financial system, primarily through bank supervision, ensuring regulatory compliance, and tracking key indicators of liquidity, solvency and asset quality. When necessary, we apply appropriate measures to mitigate cyclical risks and safeguard sectoral stability.

Our contribution also lies in the aforementioned alignment of the regulatory framework with European standards, which strengthens the resilience of the banking system and ensures its reliability.

How important are international partnerships and cooperation with European and global institutions for strengthening the credibility of the CBCG and Montenegro’s entire financial system?

The CBCG maintains active partnerships with the European Central Bank, the European Commission, the European Banking Authority (EBA), the IMF, the World Bank and numerous other international institutions. Through joint projects and the exchange of experience, we enhance the credibility and capacity of our institution. This cooperation provides us with access to the latest expertise, knowledge and best practices, which we then transfer and integrate into our own system.

How does the CBCG plan to integrate sustainable development and climate risk considerations into the financial system and supervisory policies?

The development of a financial system that supports sustainable growth is one of the CBCG’s strategic priorities. We played a leading role in drafting the Roadmap for the Transition of the Financial Sector towards Sustainable Finance, with the aim of aligning Montenegro’s financial system with European and global sustainable development standards and ESG principles.

The Roadmap, whose implementation is overseen by the Financial Stability Council, places emphasis on strengthening institutional capacity, enhancing intersectoral cooperation, and creating an enabling environment for managing climate- and nature-related risks and adopting ESG practices.

In parallel, together with the Government and other regulators, we are working on establishing a regulatory framework that encourages sustainable investment. The banking sector is already incorporating ESG principles into its policies, creating scope for further development of green financial instruments that are competitive with traditional ones.

The CBCG is also active internationally, through its participation in the Network for Greening the Financial System (NGFS) and the Sustainable Finance and Banking Network (SFBN). At the same time, we are transforming our own institution – appointing the Governor’s Adviser for ESG and Innovation, integrating sustainability principles into the CBCG Strategic Plan 2025–2028, initiating the Zero Waste Europe certification process, and, through the Green Award, promoting research and innovation in the fields of climate change and finance.

European Financial Standards, a Step Forward for Citizens