101st Meeting of the CBCG Council


16/09/2021

The Council of the Central Bank of Montenegro (CBCG) held its 101st meeting today, chaired by Governor, Mr. Radoje Žugić.


Referring to yesterday presented results of the asset quality review (AQR) process in Montenegro, the Council members expressed satisfaction with the situation and trends that characterise the banking sector. They were also satisfied that adequate capitalisation at the system level and the quality of risk management policies in banks have been confirmed.


It was stated that the positive trends in the form of growth of the most important balance sheet items (assets, loans, deposits and capital) continued after 31 December 2019, which was the reference date for the AQR implementation.


Today, the Council adopted the Central Bank of Montenegro Macroeconomic Report for Q2 2021. Statistical data for this period compared with the comparative period indicate the economy's recovery, predominantly in specific sectors, such as industrial production, trade, tourism and transport. Fiscal data are also encouraging, especially the cash budget deficit reduction, which was 54.2 million euros lower in the first half of 2021 compared year-on-year.


The Inflation Report for the second quarter of 2021, discussed by the Council today, stated that consumer prices in the first six months of 2021 were 1.2% higher on average compared year-on-year. The Report further stated that the model forecast for end-2021 projected inflation ranging between 2.4% and 3.84%, with a central tendency of 3.1%. The expert assessment of the CBCG is similar and indicates that the inflation will range from 2% to 4% at the year-end, with a 3% central projection.


At this meeting, the Council discussed the Report on Bank Lending Survey Results for Q2 2021. The Report stated that credit standards for the economy eased in this period, especially for the micro, small and medium enterprises sector and households. The exception was the housing loans segment which recorded a slight tightening of credit standards. Banks expected continued easing of credit standards for micro, small and medium enterprises in Q3 2021. Concerning households, it is possible to expect credit standards tightening for consumer and other loans and easing of standards for housing loans. 


At today's session, the Information on the analysis of data obtained through the CBCG questionnaire - Fintech: mapping of fintech and financial ecosystem in Montenegro was presented. Namely, to map fintech and the financial ecosystem in Montenegro, the CBCG conducted a survey that included banks, microcredit financial institutions (MFIs), payment and electronic money institutions operating in Montenegro. The survey was conducted to assess the state, development level and the number of companies that provide fintech services in Montenegro and the degree of their application. The survey showed that banks and other surveyed institutions cooperate with several different companies to implement new technologies, mainly for the needs of digitalisation of internal processes, development of digital customer services, etc., while a very small part is dedicated to fintech. It stated that there was significant room for progress, innovation and development. In terms of regulatory aspect, market characteristics and user habits, the identified obstacles require comprehensive and coordinated activities of regulatory institutions and the entire fintech ecosystem. 


The Council members welcomed the establishment of CBCG Fintech Hub - a regulatory innovation centre, and the organisation of the first CBCG Fintech Hackathon on “The future of digital banking and payment services in Montenegro” scheduled for 22-24 October this year.


Today, the Council adopted the Decision amending the Decision on the Contents of the Central Registry of Transaction Accounts. The amendments make a technical adjustment of the decision and specify the data banks must submit to the CBCG for updating the Central Registry of Transaction Accounts.


At today's meeting, the Council also discussed quarterly reports on the operations of banks and financial service providers on 30 June 2021 and the Reports on Central Bank operations and implementation of the Central Bank Policy in June and July.


The Council also discussed other current issues under its competence.