Reserve Requirement


Reserve requirement represents the primary monetary policy instrument of the CBCG. The CBCG requires banks to deposit the reserve requirement at the CBCG accounts (in the country and/or abroad). 


Due to specific features of Montenegro’s economy, the CBCG uses the reserve requirement to directly affect the banking system liquidity, i.e. to exert an indirect impact on the banking system’s stability and confidence. With this instrument, the CBCG also affects the banks’ lending activity, having also an indirect effect on the further process of money multiplication (the money offer) in the economy. Moreover, a change in the reserve requirement instrument may affect maturity structure of deposits.

The base for calculating reserve requirement comprises demand and time deposits, except central bank deposits. The reserve requirement rate is 7.5% on a part of the base consisting of demand deposits and deposits with the agreed maturity up to one year (365 days) and 6.5% on a part of the base consisting of deposits with the agreed maturity over one year (over 365 days). Banks shall deposit the calculated reserve requirement to the reserve requirement account in the country and/or at the CBCG accounts abroad, and they may not allocate or deposit reserve requirement in any other form. The reserve requirement is allocated in euros. The CBCG shall pay monthly remuneration to banks on 50% of their reserve requirements funds that is to be calculated at the EONIA rate minus 10 basis points on annual basis until the eighth calendar day in the current month for the previous month, provided that this rate may not fall below zero.


The calculation period is a monthly period, from the first until the last calendar day in the respective month in which a bank is obliged to calculate the base. The maintenance period is a monthly period, from the third Wednesday in the respective month until the day preceding the third Wednesday of the following month, over which a bank is obliged to maintain the prescribed reserve requirement.


If a bank fails to allocate the reserve requirement in the prescribed amount and within the specified deadline, it shall pay monthly fee for the miscalculated or the reserve requirement it failed to allocate in timely manner, at the annual interest rate of 12%.


A bank may use up to 50% of its reserve requirement deposits to maintain its daily liquidity. It shall not be charged any interest if it returns the funds at the end of the same day, and if it fails to return it at the end of the same day, it shall pay a fee at the annual interest rate of 12%.


Decision on Bank Reserve Requirement to be held with the Central Bank of Montenegro(OGM 88/17)


Monthly data on bank reserve requirement held with the CBCG.


The reserve requirement instrument was changed several times since the CBCG has been established.


The base for reserve requirement calculation:


  • As of January 2018: demand and time deposits, except central bank deposits;
  • As of October 2011: demand and time deposits;
  • From February 2009 to October 2011: demand and time deposits;
  • From January 2008 to February 2009: average weekly amount of deposits by public sector, regardless of their maturity, of demand deposits by other sectors and of time deposits by other sectors with maturity less than 2 years, by applying different reserve rates;
  • From April 2006 to January 2008: average weekly amount of demand deposits and of time deposits with maturity less than 1 year, by applying different reserve rates;
  • From mid-August 2004: average weekly amount of demand deposits and of time deposits with maturity of up to 30 days;
  • From April 2003 to August 2004: average two-week amount of demand deposits and of time deposits with maturity of up to 30 days;
  • From January 2002 to April 2003: average two-week amount of demand deposits in euros and of other time deposits in other currencies.


Reserve requirement rate:


  • As of March 2017: 7.5% on a part of the base consisting of demand deposits and deposits with the agreed maturity up to one year (365 days) and 6.5% on a part of the base consisting of deposits with the agreed maturity over one year (over 365 days);
  • From October 2011 to March 2017: 9.5% on a part of the base consisting of demand deposits and deposits with the agreed maturity up to one year (365 days) and 8.5% on a part of the base consisting of deposits with the agreed maturity over one year (over 365 days)
  • From June 2009 to October 2011: 10%
  • From February 2009 to June 2009: 11% 
  • From January 2008 to February 2009: 19% on deposits by public sector, regardless of their maturity, on demand deposits and to time deposit by other sectors, which maturity, on the days for the reserve requirement calculation, is less than 180 days, and 2% on time deposits by other sectors, which maturity, on the days for the reserve requirement calculation is over 180 days but less than two years; 
  • From April 2006 to January 2008: 19% on demand deposits and time deposits with maturity, on the reserve requirement calculation days, less than 90 days, and 5% to time deposits with maturity, on the reserve requirement calculation days, over 90 days but less than one year;
  • From April 2003 to April 2006: 23% on demand deposits and on time deposits with maturity of up to 30 days;
  • From November 2002 to April 2003: 50% on demand deposits;
  • From July to November 2002: 60% on demand deposits;
  • From March to July 2002: 70% on demand deposits;
  • From January to March 2002: 80% on demand deposits;
  • Until January 2002: 100% on demand deposits.


Reserve requirement allocation:


  • As of March 2017: at the reserve requirement account in the country and/or at the CBCG accounts abroad;
  • From January 2016 to March 2017: at the reserve requirement account in the country and/or at the CBCG accounts abroad, up to 25% of their reserve requirement in T-bills of any maturity issued by Montenegro; 
  • As of end-February 2015: at the reserve requirement account in the country and/or at the CBCG accounts abroad, up to 25% in T-bills issued by Montenegro regardless of their maturity, and subsequently additional 10% in T-bills issued by Montenegro with maturity up to 182 days;
  • As of January 2015: at the reserve requirement account in the country and/or at the CBCG accounts abroad, up to 35% in the form of T-bills issued by Montenegro with maturity up to 182 days;
  • As of January 2014: at the reserve requirement account in the country and/or at the CBCG accounts abroad, up to 30% in the form of T-Bills issued by Montenegro with maturity up to 182 days, and up to 13% in the form of T-Bills issued by Montenegro with maturity up to 91 day;
  • As of April 2012: at the reserve requirement account in the country and/or at the CBCG accounts abroad; up to 35% in the form of T-Bills issued by Montenegro;
  • As of June 2009: at the reserve requirement account in the country and/or at the CBCG accounts abroad; up to 25% in the form of T-Bills issued by Montenegro;
  • From February 2009 to June 2009: at the reserve requirement account in the country and/or at the CBCG accounts abroad; up to 20% in the form of T-Bills issued by Montenegro;
  • From January 2008 to February 2009: at the reserve requirement account in the country and/or at the CBCG accounts abroad;
  • From April 2006 to January 2008: at the reserve requirement account in the country and/or at the CBCG accounts abroad; up to 10% in the form of T-Bills issued by Montenegro;
  • From April 2003 to April 2006: at the reserve requirement account in the country (with the CBCG) and/or at the CBCG accounts abroad; up to 25% in the form of T-Bills issued by Montenegro;
  • From 2002 to April 2003: at the reserve requirement account in the country; up to 10% in the form of T-bills issued by the Republic of Montenegro.


Interest rate on the allocated reserve requirement:


  • As of March 2017: the CBCG shall pay monthly remuneration to the bank on 50% on its reserve requirement funds to be calculated at the EONIA  rate minus 10 basis points on annual basis until the eighth calendar day in the current month for the previous month, provided that this rate may not fall below zero;
  • From January 2016 to March 2017: on the amount representing the difference between 50% of total reserve requirement funds and the amount of funds allocated in the form of T-bills, a maximum of 25% of total reserve requirement funds allocated, the CBCG shall pay monthly remuneration to banks, until the eighth calendar day in the current month for the previous month, calculated at the EONIA rate minus 10 basis points on annual basis, provided that this rate may not fall below zero; 
  • As of January 2015: the CBCG shall pay monthly remuneration to the bank on 15% on its reserve requirement funds to be calculated at the EONIA rate minus 10 basis points on annual basis, provided that this rate may not be lower than zero;
  • As of January 2014: the CBCG shall pay monthly remuneration to the bank on 7% on its reserve requirements funds to be calculated at the EONIA rate minus 10 basis points on annual  basis, provided that this rate may not be lower than zero;
  • As of January 2013: The CBCG shall pay monthly remuneration to the bank on 15% of its reserve requirements funds, at the EONIA rate minus 10 basis points on annual basis, provided that this rate may not be lower than zero;
  • As of April 2012: the CBCG shall pay monthly remuneration fee to the bank on 15% of reserve requirements funds, at the rate of 1% on annual basis
  • From June 2009: the CBCG shall pay monthly remuneration to the bank on 25% of reserve requirements funds, at the rate of 1% on annual basis
  • From February 2009 to June 2009: the CBCG shall pay monthly remuneration to the bank on 30% of reserve requirements funds, at the rate of 1% on annual basis
  • From January 2008 to February 2009: the CBCG shall pay monthly remuneration to the bank on 50% of reserve requirements funds, at the rate of 1% on annual basis
  • From April 2006 to January 2008: the CBCG shall pay monthly remuneration to the bank on 40% of reserve requirements funds, at the rate of 1% on annual basis
  • From April 2003 to April 2006: the CBCG shall pay monthly remuneration to the bank on 25% of reserve requirements funds, at the rate of 1% on annual basis
  • From July 2002 to April 2003: the CBCG paid monthly remuneration to the bank on 40% of reserve requirements funds, at the rate of 1% on annual basis
  • From January to 1 July 2002: the CBCG did not pay interest to reserve requirement funds deposited at the reserve requirements account.


Interest rate on miscalculated reserve requirement or reserve requirement not-allocated within the deadline:


  • Since January 2002: 12% at the annual level.


Conditions for the use of reserve requirements for liquidity:


A bank may use up to 50% of its reserve requirement deposits to maintain its daily liquidity interest free if it returns the funds by the end of the same business day. The CBCG calculates monthly interest on the unpaid amount of the reserve requirement:


  • As of October 2011: 12% at the annual level;
  • From June 2009 to October 2011: 7% at the annual level;
  • From April 2006 to June 2009: 11% at the annual level;
  • Until April 2006: 12% at the annual level.