---

Article 143 of the Constitution of Montenegro (OGM 01/07 and 38/13) defines the responsibility of the Central Bank of Montenegro for financial stability, where it specified that the CBCG is responsible for "monetary and financial stability and functioning of the banking system."

The definition of the primary objective of the CBCG underlined in Article 4 of the Central Bank of Montenegro Law (OGM 40/10, 46/10, 6/13 and 70/17), confirms this authority through specifying "fostering and maintaining the financial system stability, including fostering and maintaining a sound banking banking system and secure and efficient payment transactions."

By focusing on the financial market participants and overall financial infrastructure, the Central Bank implements its activities in several areas - using different policy instruments for maintaining financial stability, microprudential policy instruments, as well as monetary policy instruments, whenever possible. Generally, the performance of all CBCG functions is directed towards the ultimate objective and that is the fostering and preservation of financial stability.

Preserving financial stability includes the assessment of soundness of financial institutions and markets, the supervision of the financial system, as well as overseeing the financial infrastructure in order to recognize vulnerabilities and define the manner of their management. The policy of preserving stability implies the assessment of the level of stability of all system components, preventive actions in order to control risk appetite, regular regulatory and supervisory actions aimed at increasing the system's resilience and, potentially, undertaking the necessary measures in case of risk materialisation.

With the goal of a comprehensive and systemic approach in preserving the system stability, the CBCG also acts through the Financial Stability Council (FSC) comprised of representatives of the CBCG, the Ministry of Finance, the Capital Market Authority, and the Insurance Supervision Agency. The FSC was established under the Financial Stability Council Law enacted in July 2010 and it started operating in October that year. This body represents an effective platform for consultation on financial stability issues. Activities within the scope of work of the FSC are focused on the goal of preventing or mitigating systemic risks in the financial system of Montenegro as a whole in order to ensure the financial system stability and reduce the impact of factors that could threaten financial stability in the country.