## Montenegro: Financial System Stability Assessment

_IMF Staff Country Reports, March 23, 2016_

## Source details

**Canonical URL:** [Montenegro: Financial System Stability Assessment](https://www.imf.org/en/publications/cr/issues/2016/12/31/montenegro-financial-system-stability-assessment-43820)

## Other formats

- [Markdown version](/en/publications/cr/issues/2016/12/31/montenegro-financial-system-stability-assessment-43820/index.md)
- [Structured JSON version](/en/publications/cr/issues/2016/12/31/montenegro-financial-system-stability-assessment-43820/index.json)
- [Bundle manifest](/en/publications/cr/issues/2016/12/31/montenegro-financial-system-stability-assessment-43820/bundle-manifest.json)

## Bibliographic details
- Published: March 23, 2016
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781475519815.002

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### 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

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## Content in this bundle

- **Montenegro: Financial System Stability Assessment; IMF Country Report 16/88; February 8, 2016**
  - [Montenegro: Financial System Stability Assessment; IMF Country Report 16/88; February 8, 2016 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr1688.pdf.md){rel="alternate" type="text/markdown"}
  - [Montenegro: Financial System Stability Assessment; IMF Country Report 16/88; February 8, 2016 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr1688.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/montenegro-financial-system-stability-assessment-43820_