Working meeting with the management of the central bank of Montenegro

Skopje, 4 July 2022

On 29-30 June, the National Bank delegation led by Governor Anita Angelovska Bezhoska visited the Central Bank of Montenegro, where they met with Governor Radoje Zhugic and his team.

Special attention was devoted to challenges the policy makers have been facing for a long period of time, in conditions of protracted global crisis. Particular emphasis was also placed on the rising inflation, which is currently one of the key issues for central banks. At the meeting, it was jointly concluded that price pressures, especially for small and open economies, are a consequence of the global issues arising from the pandemic related to supply chains, amid opening of economies and normalization of demand. There are also intense pressures through the channel of rising energy and food prices on the world stock markets. These pressures are even more emphasized by the crisis in Ukraine. Considering the long-term nature of these developments, it was concluded that there is a need to act through macroeconomic policies in order to mitigate price growth and prevent growth of long-term inflationary expectations.

The meeting also shed light on the issue of financial stability in times of crisis. It was concluded that the banking systems in both countries have demonstrated solid performance and relatively high resistance to external shocks in the past period. The high solvency, bank liquidity, and good credit portfolio quality show that the banks successfully passed the test of the protracted crisis, with good starting positions before the onset of the crisis, sound policies and prudent regulation. However, taking into account the prolonged nature and strength of the crisis, there is likelihood of adverse effects on the real economy and transferable effects on banks' balance sheets, which requires prudent monitoring, sound risk management, and further developing of capital positions to deal with potential risks.

The meeting also addressed opportunities and areas where the two central banks can strengthen their successful, long-standing cooperation.