Montenegro: Financial System Stability Assessment
IMF Staff Country Reports, March 23, 2016
Source details
- Canonical URL
- Montenegro: Financial System Stability Assessment
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Bibliographic details
- Published: March 23, 2016
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781475519815.002
Overview
- This paper focuses on the important issues of Montenegro economy which are as follows: microfinancial setting, financial system resilience, financial oversight, resolution of nonperforming loans, and financial safety nets.
- Montenegro is still dealing with the aftermath of the collapse of the lending boom in 2008.
- Economic momentum has accelerated in 2015, but there are numerous downside risks.
- System-wide solvency and liquidity indicators appear broadly sound, but significant pockets of vulnerabilities exist among domestically owned banks.
- Decisive action to deal with weak banks is critical for preserving financial stability.
- While the legal, regulatory, and supervisory frameworks for banking and insurance sector have markedly improved since 2006 Financial Sector Assessment Program, further progress is required.
Key findings and diagnostics
- Post-2008 lending boom collapse continues to affect the economy and financial sector.
- 2015 saw accelerated economic momentum, but this is accompanied by numerous downside risks.
- System-wide solvency and liquidity indicators: described as "broadly sound" in aggregate.
- Concentrated vulnerabilities: significant pockets of weakness exist specifically among domestically owned banks.
- Nonperforming loans and their resolution are core concerns for financial stability.
Risks and vulnerabilities
- Legacy effects from the 2008 lending boom collapse remain material for the financial system.
- Domestically owned banks exhibit concentrated solvency and/or liquidity weaknesses despite broadly sound system-wide indicators.
- Downside risks to the economic outlook could exacerbate asset-quality and funding strains.
Policy recommendations and priorities
- Take decisive action to deal with weak banks to preserve financial stability.
- Continue strengthening the legal, regulatory, and supervisory frameworks for the banking and insurance sectors; further progress is required beyond improvements made since the 2006 Financial Sector Assessment Program.
- Address resolution of nonperforming loans and enhance financial safety nets as part of a comprehensive stability strategy.
Subjects and keywords (as presented)
- Subject: Asset and liability management, Bank resolution framework, Banking, Commercial banks, Credit, Financial crises, Financial institutions, Liquidity, Money, Nonperforming loans
- Keywords: a number of bank, asset, bank, bank relationship management, bridge bank, camel rating, camel-rated bank, CBM oversight function, CBM payment system, CBM-managed payment, Commercial banks, CR, Credit, excessive risk aversion, funding, Global, ISCR, Liquidity, liquidity contingency plans, Nonperforming loans, private sector, relationship management, resolution planning
Content in this bundle
- Montenegro: Financial System Stability Assessment; IMF Country Report 16/88; February 8, 2016