Second CBCG Advisory Board meeting held

21/03/2019

The Central Bank of Montenegro’s Advisory Board, whose members are esteemed professors, former governors from the region as well as former CBCG Council members, held its second meeting today. The meeting was attended by Mr Ichak Adizes, a world-renowned professor, founder and CEO of the AdizesInstitute in Santa Barbara (USA), and the CBCG Council members.

Banking sector trends and challenges were the main focus of discussion at the meeting of the Board. Mr Radoje Žugić, the Governor of the CBCG, introduced the Board Members to the banking sector indicators and key activities the CBCG has been taking with a view to strengthening supervision and improving anti-money laundering and terrorist financing measures. “Growth of deposits and lending activity, along with continued decline in interest rates and the level of non-performing loans, substantiates that Montenegro’s banking sector is stable and improved”, stated Mr Žugić.

The Board members discussed the challenges the financial sector is facing at a global level, as well as their effects on banks in the countries of the region. It was concluded that the banks, primarily face the challenges related to fin-tech, which entails numerous and major changes. With a view to adapting to those changes, banks and financial institutions need to be flexible, but, at the same time, receive adequate supervision in order to avoid, or reduce risks to financial stability. The Board further concluded that it is, therefore, necessary to strike the right balance of regulation, without undermining the required flexibility, or threatening financial stability, which is the primary objective of every central bank. 

Discussing the significance of the supervisory function of central banks and the models of its execution, the Board concluded that supervision of systemically important banks requires special attention. The Board also considered the manners to improve supervision through establishing mechanisms that would enable the central banks to acquire additional information significant to the supervision, whereby those mechanisms should not jeopardise the independence of banks and private companies. 

The members of the Advisory Board also considered the challenges in Montenegro’s fiscal sector. The resolute process of fiscal consolidation as well as the good pace of economic growth were deemed favourable, while the public debt level was marked as a potential risk in the case of unanticipated external or internal shocks. 

As a part of the meeting, professor Adizes gave a lecture on “The Key Factors for Success of an Organisation”, and presented his unique approach to managing an organisation and changes, based on the principles of mutual respect and trust.