| Policy of the Central Bank of Montenegro for 2004 |
Pursuant to Article 17, Paragraph 1, Item 1 of the Law on the Central Bank of Montenegro (“Official Gazette of the Republic of Montenegro”, No. 51/00 and 47/01), the Council of the Central Bank of Montenegro at its meeting held on January 30, 2004 adopted the
Relying upon the results of the policies in the previous years, the Central Bank of Montenegro shall set the following aims for 2004:
1. Maintenance of a high level of solvency of the banking system, improvement of financial discipline and confidence in the banking system by increasing the level of accordance with the Basic Basel Principles for efficient bank supervision;
2. Active participation in creating the necessary conditions for regulation of the banking system liquidity and improvement of the monetary reserves management of the Republic of Montenegro;
3. Enabling efficient payment operations through further development of payment systems in accordance with international standards and references;
4. Efficient performance of the functions of banker, advisor, and fiscal agent on behalf of the agencies and organisations of the Republic of Montenegro;
5. Cooperation with international financial institutions, central banks, and other relevant international organisations;
6. Monitoring and analysing the position and impact of the financial and banking system on overall macroeconomic developments;
7. Upgrade of personnel and technical efficiency, and public presentation methods;
1. In order to increase the level of accordance with the Basic Basel Principles for efficient bank supervision, and strengthening confidence in the banking system, the Central Bank of Montenegro shall work on the following:
a. Preparation of new regulations and adjustment of existing banking system regulations;
b. Comprehensive creation of risk assessment parameters and their implementation through on-site and off-site bank supervision;
c. Enforcement of adequate measures against banks in order to prevent the possible adverse effects on the banking system;
d. Licensing of new banks and other financial institutions in accordance with established security principles, and increasing the level of competitiveness in the banking sector;
e. Speeding up of the activities on completing the ongoing bank bankruptcy proceedings and liquidation proceedings;
f. Exchange of data and experiences in bank supervision by signing agreements, and establishment of cooperation with other bank supervision regulation agencies;
2. The Central Bank shall take an active part in creating the necessary conditions for the regulation of the banking system liquidity and improvement of the monetary reserves management of the Republic of Montenegro through:
a. Creation of an institutional framework for the development of the money market and the short term securities market;
b. Creation of an institutional framework for open market operations;
c. Implementation of an active reserve requirement policy;
d. Preparation of analyses and studies on: the structure and amount of the money supply and its impact on economic stability; level, structure, and use of the monetary reserves in the Republic;
e. Managing the monetary reserves in the Republic for the purpose of: (I) maintaining general foreign payments liquidity, (II) minimizing risk, and (III) maximizing benefits;
f. Providing the required amounts and denomination structure of euros, and adequate distribution of banknotes and coins to be used in financial transactions;
3. The Central Bank shall enable efficient payment operations and further development of the payment systems through:
a. Preparation of a new regulation framework;
b. Establishment of new organisational structures in accordance with developing demands of payment operation functions;
c. Transfer and reconfiguration of non-payment functions to the new authorised institutions;
d. Implementation of the new interbank payment system as a basic prerequisite for realisation and connection of interbank systems, and integration in the international RTGS system network;
e. Implementation of the Central Bank’s internal payment system for its own needs and the needs of its clients;
f. Support in forming and improving the intrabank accounting systems in commercial banks;
4. In order to perform efficiently the functions of banker, advisor, and fiscal agent on behalf of the agencies and organisations of the Republic of Montenegro, the Central Bank shall:
a. Continue improving the level of banking services delivered to agencies and organisations of the Republic;
b. Perform domestic and foreign payment operations on behalf of agencies and organisations of the Republic;
c. Monitor the inflow and use of financial assets given to the Republic as credits and donations, as well as the inflow and use of other funds from abroad;
d. Conduct the activities on closing the deposit accounts of the Government with commercial banks and transfer the funds to the all-in-one account with the Central Bank in cooperation with the Ministry of Finance;
e. Produce monthly reports on developments in the monetary, real, and fiscal sectors, and in the field of economic relations between the Republic and foreign countries in order to prepare timely recommendations and advice to the Government;
f. Make recommendations to the Government for conducting the economic policy on an annual basis and more often if necessary;
g. Advise the Government on financing the current budgetary deficit, debit limit, and public debt reduction;
5. In order to upgrade cooperation with international financial institutions, central banks, and other relevant international organisations the Central Bank shall:
a. Conduct the activities on certification procedure with the World Bank for financial transactions, withdrawal of assets, and servicing of loans of the Republic of Montenegro;
b. Improve the established cooperation with regulatory agencies and other central banks;
c. Work actively on the upgrade of the existing and establishment of new correspondent relations with foreign banks and banking institutions;
d. Present the achievements in the banking sector reform to the relevant international institutions and organisations;
e. Finalise the negotiations with the National Bank of Serbia on division of property and liabilities, division of the public debt, and definition of the model for establishing payment operations between the Republics;
f. Take an active part in the process of accession to the European Union in accordance with its legal competence.
6. The Central Bank shall monitor and analyse the position and impact of the financial and banking system on overall macroeconomic developments through:
a. Preparation of the macroeconomic model for the Republic of Montenegro, realisation of special analyses and studies on the structure and amount of the money supply and its effect on economic stability, and analyses and studies on the level, structure, and purpose of the monetary reserves in the Republic of Montenegro;
b. Preparation of monthly reports on developments in the monetary, real, and fiscal sectors, and in the field of economic relations between the Republic of Montenegro and foreign countries;
c. Preparation of quarterly macro-analytical off-site reports on the general state of affairs in the banking system in the Republic of Montenegro.
7. The Central Bank shall work on the improvement of personnel and technical efficiency, and public presentation methods through:
a. Improvement of regulatory rules that govern internal relations;
b. Upgrade of the IT system and technological equipment;
c. Design and implementation of the IT security policy project of the Central Bank;
d. Improvement of the human resources management, and development of motivation mechanisms and continuous professional development of personnel;
e. Increase in the level of business transparency and upgrade of public relations.
THE COUNCIL OF THE CENTRAL BANK
P. No. 0101-213/1-6-2004
Podgorica, February 19, 2004
PRESIDENT OF THE COUNCIL
Mr Ljubiša Krgović