Financial Stability Council Meeting
25/12/2024
Today, the Financial Stability Council (FSC) held its 71st meeting chaired by Ms Irena Radović, the CBCG Governor and the Council Chairman, and attended by the Council members Mr Novica Vuković, the Minister of Finance, Mr Željko Drinčić, the President of the Capital Market Authority, and Mr Marko Ivanović, the President of the Insurance Supervisory Agency’s Council. The Director General of the Deposit Protection Fund, Mr Vojin Vlahović, also attended the meeting at the Governor’s invitation.
The Council discussed the Information on Financial Stability for Q3 2024 at today’s meeting. This document states that the Montenegrin economy grew by 2.7% in the second quarter of this year, with reduced inflation to desired values and stable state finances, including a budget surplus and a slight improvement in Montenegro’s credit rating to B+. The banking sector is stable, solvent and liquid, with continued growth of deposits that banks increasingly divert into loans.
Emphasising the exceptional importance of Montenegro’s recent admission to the Single European Payment Area (SEPA), the FSC members also discussed the upcoming obligations regarding Montenegrin banks joining the SEPA payment scheme. As Governor Radović said, as the bearer of activities related to Montenegro’s membership in SEPA, the CBCG continues to coordinate this process with full dedication. The CBCG has formed a special team that actively monitors the implementation of activities and fully supports banks that have started work on technical preparation, which also includes establishing new software solutions and procedures for processing transactions and adequate security protocols to ensure efficient and secure data exchange. CBCG also provided technical assistance for banks through the support of external expert specialists for SEPA payment schemes.
The FSC concluded that the key priorities for the successful implementation of SEPA in Montenegro are the urgent adoption of the Law Amending the Law on Credit Institutions, the Law on Financial Conglomerates and the Law Amending the Payment System Law, and the establishment of the National Board for Payment Transactions. Therefore, the FSC members concluded that effectively coordinating of all involved actors is crucial.
The FSC members also discussed the CBCG’s plans for developing the domestic instant payment system at the meeting. In cooperation with the Bank of Italy and the European Central Bank, the CBCG started activities to implement the TIPS (Target Instant Payment Settlement) clone, which is based on the EU’s TIPS payment system. To implement the project and other activities related to the payment system modernisation, the Ministry of Finance approved borrowing within the budget of Montenegro of up to eight million euros, secured from the credit arrangement with the World Bank and repaid by the CBCG in predetermined tranches.
Considering the current economic trends, the FSC members agreed that the financial system is stable, and the risk level is moderate. Meanwhile, geopolitical and external risks are decreasing and monitoring cyclical trends should be the focus.