The CBCG Council recommends prudence in making a decision on the state’s borrowing on the domestic market
20/03/2023
Today, the Council of the Central Bank of Montenegro held its 137th meeting chaired by Governor Radoje Žugić.
The Council stated that the banking sector was stable and characterised by sound business indicators. Concerning the announced possibility of issuing government bonds on the domestic market, the Council recommended preparing a detailed analysis of the impact on the banking system before making such a decision. Namely, issuing bonds on the domestic market could lead to deposits outflow from banks that might affect their liquidity position and/or the availability of funds that banks place towards the population and the economy. To preserve financial stability, making a decision on State borrowing on the domestic market requires careful analysis of the mentioned risks and prudence, the members of the CBCG Council concluded.
To meet the CBCG’s obligation to determine the countercyclical buffer rate for the territory of Montenegro quarterly stemming from the Law on Credit Institutions, the Council adopted the Decision on the Manner of Calculating Specific Countercyclical Capital Buffer Rate of a Credit Institution for Q2 2023. Based on the analysis of relevant trends in the banking sector and the overall economy, the Decision sets that the Countercyclical Capital Buffer Rate for Q2 2023 will be 0%.
Under the same Law, the CBCG must conduct at least annual review of other systemically important credit institutions (O-SICIs) and the buffer rate they must maintain. As the result of the procedure, the Council made decisions on retaining the status of O-SICIs for those credit institutions that had been O-SICIsV until now. This year, another credit institution established an O-SICI joined them for the first time.
The Payment Systems Monitoring Report 2022, discussed today at the Council, stated that the CBCG payment system operated smoothly in the previous year and completed 12.5 million transactions worth 18.3 billion euros or 9.9% more than in 2021.
At today’s meeting, the Council adopted the Report on Central Bank operations and implementation of the Central Bank Policy in December 2022 and discussed other issues under its competence.