A high-level dialogue with the European Central Bank
19/09/2018
The delegation of the Central Bank of Montenegro, headed by the Governor, Mr Radoje Žugić, participated at the meeting in Frankfurt today, dedicated to a high-level dialogue with the European Central Bank (ECB). The ECB delegation was headed by Mr Benoît Cœuré, a member of the Executive Board.
Governor Žugić presented to the ECB representatives the current macroeconomic situation as well as the condition of the financial system in Montenegro.
"According to MONSTAT estimates, the Montenegrin economy grew by 4.3% in 2017. This trend continued this year as well, in particular as a result of strong investment activity, growth of domestic demand and private consumption, as well as increased tourism traffic", said Governor Žugić, adding that Montenegro must continue to diversify its economy in order to reduce its dependence on weather conditions.
As for the banking sector, it is characterized by stability, high liquidity and solvency. Non-performing loans are continuously decreasing and currently stand at 217.9 million euro (7.4%). This is a significant drop compared to 2011, when the NPL level equalled 25.9%. Lending interest rates tend to fall further, although, as the Governor mentioned, they represent a set of inputs for the real economy. On the other hand, despite low deposit interest rates, deposits are growing, which is a proof of trust in the banking system.
The Governor also briefed on the CBCG's activities on improving the regulatory framework, in order to fully harmonize it with EU standards and best banking practice.
As the meeting continued, the CBCG Vice-Governors Mr Nikola Fabris and Mr Miodrag Radonjić presented to the representatives of the ECB the framework for managing macro-prudential policy with potential instruments in the function of further financial stability strengthening, followed by preliminary results of the survey on the credit activity of banks, as well as the policy of managing international reserves and effects of the reserve requirement implementation, as a monetary policy instrument.
Macroeconomic situation and development of the banking sector in the Euro area, the ECB monetary policy, as well as the dollar increase and its impact on stability were discussed during the dialogue.
High-level dialogue confirms the excellent cooperation between CBCG and the largest monetary institution of the European Union and aims at preparing Montenegro and other candidate countries for membership in the European System of Central Banks.