CBCG independence and transparency
Central bank independence is the fundamental precondition for a successful pursuit of monetary policy. It may be functional, institutional, personal, and financial independence.
The principle of independence of the CBCG was implemented to a large extent in line with the Law on the Central Bank of Montenegro as of July 2010. However, with the adoption of the Law Amending the Central Bank of Montenegro Law in October 2017, the principle of independence of the CBCG was implemented in full through the incorporation of recommendations of the European Commission Screening Report for Chapter 17 - Economic and Monetary Policy of 7 May 2014.
Central Bank of Montenegro Law (OGM 40/10, 46/10, 6/13, and 70/17)
With regard to its functional independence, the CBCG has all instruments and powers at its disposal needed to enforce monetary policy within the current monetary regime in Montenegro. The CBCG is independent in passing decisions on using the monetary policy instruments. The amended Law explicitly determines that the maintenance of price stability will be the main objective of the CBCG as of the day of Montenegro’s accession to the European Union.
The amended Law additionally strengthened the principles of institutional and personal independence of the CBCG that are consistently applied in practice.
In consideration of financial independence, the CBCG is independent in managing appropriate assets needed for fulfilling its tasks in adequate manner.
A central bank acts transparently if it continuously provides and clearly communicates information on its operations relevant for the economic sector’s functioning.
According to the IMF definition, transparency refers to an environment in which the objectives of policy (legal, institutional, and economic framework), policy decisions and their rationale, data and information related to monetary and financial policies are provided to the public on understandable, accessible and timely basis. Moreover, central bank transparency is broadly defined as the absence of asymmetric information between financial markets and monetary policymakers, i.e. enabling financial market participants to better understand monetary policy actions and their effects on economic trends.
A central bank should communicate with the public on: monetary and economic policy objectives, monetary policy instruments, macroeconomic environment in which the central bank objectives and forecasts are realised.
The CBCG may be considered as a central bank with a high degree of transparency.
The CBCG regularly informs the public on the most important issues discussed at the CBCG Council meetings and also on main trends in Montenegro’s economy through monthly CBCG Bulletin, quarterly CBCG Macroeconomic Report and Inflation report, annual Financial Stability Report, CBCG Annual Macroeconomic Report, Price Stability Report and CBCG Financial Report with the External Auditor’s Report. The CBCG also prepares and publishes working papers covering current economic issues.