Measures to preserve financial stability
In addition to macroprudential measures in the strict sense, the CBCG acts to preserve financial stability by using other available instruments. Looking back, before the economic crisis hit Montenegro in 2008, the CBCG introduced, inter alia, administrative restrictions to credit growth; also, during the crisis time, as a part of a set of other measures aimed at preserving stability, it temporarily relaxed the criteria for credit classification and regulatory requirements for credit losses. Then, in 2012 and early 2013, the banking interest rates were subject to prudential measures. The Law on Voluntary Financial Restructuring of Debts Towards Financial Institutions (OGM 20/15, 37/17, 43/18), which was in force from May 2015 until May 2019 and whose drafting had been initiated and prepared by the CBCG, was adopted with a view to restructuring debts in the real economy, reviving credit growth, and decreasing the share of non-performing loans in the system.
Also, one of the few monetary policy instruments at the CBCG`s disposal, the reserve requirement instrument, is used for macroprudential purposes, that is, the provision of reserve liquid assets. In addition, the instrument is implemented through differentiated reserve requirement rates, whereby the higher rate applies to demand deposits and deposits of shorter maturity, and a lower rate is applied to deposits of longer maturity, with the aim of reducing the maturity mismatch between loans and deposits. At present, a 5.5% rate is applied to demand deposits and deposits with the maturity up to one year, while a 4.5% rate is applied to deposits over one year. In addition, in March 2017, the CBCG introduced the interest rate equal to the ECB's marginal lending rate yet reduced by 10 basis points, to funds of banks placed with the CBCG in their RTGS accounts in order to encourage banks to divert their free financial assets to the real economy and to a more dynamic recovery.
The Central Bank of Montenegro has developed regulations for the implementation of the regulatory package Basel III, i.e. the CRD IV package (Regulation 575/2013 and Directive 2013/36/EU) already implemented in the EU. The development of instruments necessary for the implementation of the aforesaid regulations, subject to appropriate calibration, has been coordinated through the transposition of the CRD IV package into the national legislation, which shall apply from 1 January 2022. As a preparation for the introduction of Basel III and the full operationalization of the macroprudential policy mandate, the CBCG developed the Macroprudential Policy Framework.