Republic of Montenegro: Financial System Stability Assessment
IMF Staff Country Reports, February 4, 2008
Source details
- Canonical URL
- Republic of Montenegro: Financial System Stability Assessment
Other formats
Bibliographic details
- Published: February 4, 2008
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451826722.002
Key findings
- Montenegro is undergoing rapid credit growth in the context of heavy foreign bank presence and euro use.
- The rate of credit expansion is testing the limits of banks’ capacity to underwrite loans prudently and maintain adequate buffers.
- Rapid credit growth is posing supervisory challenges, despite relatively strong financial sector regulation and supervision.
Risks and vulnerabilities
- Heavy foreign bank presence coupled with euro use increases exposure to cross-border and currency-related dynamics.
- Rapid credit growth risks:
- Deterioration in underwriting standards.
- Erosion of banks’ capital and liquidity buffers.
- Increased difficulty for supervisors to monitor and contain emerging risks.
Policy recommendations
- Implement a mix of prudential strengthening and targeted measures to address specific vulnerabilities, including:
- Prudential strengthening required to address risks emanating from rapid credit growth.
- Measures to address specific vulnerabilities related to bank funding, liquidity, credit risk, and supervisory capacity.
Subject coverage and keywords (as provided)
- Subject: Banking, Capital adequacy requirements, Commercial banks, Credit, Credit risk, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Money, Stress testing
- Keywords: adequacy level, bank funding, bank lending, banking sector, banking system, Capital adequacy requirements, capital market, Commercial banks, CR, Credit, credit risk, Credit risk, financial system, ISCR, liquidity ratio, problem bank resolution procedure, prudential liquidity management, risk management practice, state-enterprise deposit placement, Stress testing, treasury bill
International Monetary Fund. Monetary and Capital Markets Department "Republic of Montenegro: Financial System Stability Assessment", IMF Staff Country Reports 2008, 050 (2008), accessed 9/22/2026, https://doi.org/10.5089/9781451826722.002