Republic of Montenegro: Financial System Stability Assessment

Author: International Monetary Fund. Monetary and Capital Markets Department

Volume/Issue: Volume 2008 Issue 050

Publication date: February 2008

ISBN: 9781451826722

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Finance , Money and Monetary Policy , ISCR , CR , capital market , banking system , problem bank resolution procedure , risk management practice , state-enterprise deposit placement , financial system , credit risk , liquidity ratio , bank lending , prudential liquidity management , treasury bill , banking sector , adequacy level , bank funding , Credit , Credit risk , Stress testing , Commercial banks , Capital adequacy requirements

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Summary

Montenegro is undergoing rapid credit growth in the context of heavy foreign bank presence and euro use. However, the rate of credit expansion is testing the limits of banks’ capacity to underwrite loans prudently and maintain adequate buffers. Rapid credit growth is now also posing supervisory challenges, despite relatively strong financial sector regulation and supervision. The recommended policy response is a mix of prudential strengthening required to address risks emanating from rapid credit growth, and measures to address specific vulnerabilities.