Central banks in small and highly open economies must be flexible and adaptable, while also being firm in maintaining trust in the financial system, said Irena Radović, Governor of the Central Bank of Montenegro (CBCG). She made these remarks during the traditional Reykjavik Economic Conference, organized by the Central Bank of Iceland and the Center for International Macroeconomics.
At the invitation of Ásgeir Jónsson, Governor of the Central Bank of Iceland, Radović participated in the panel discussion titled “Economic Consequences of Living Beyond Means – Debt and Deficit as Risk Factors,” alongside Signe Krogstrup, Governor of the Danmarks Nationalbank, and Gylfi Zoëgs, Professor at the University of Iceland. The panel was moderated by Sigríður Benediktsdóttir from Columbia University.
The conference gathered prominent representatives from the academic community and central banks to exchange views on current macroeconomic challenges, the impact of geopolitics on international trade and financial stability, as well as the importance of maintaining fiscal sustainability in the context of rising global interest rates and geopolitical uncertainty, according to a statement from CBCG.
Radović highlighted that the Ministry of Finance of Montenegro has made significant progress in consolidating public finances in the post-pandemic period, reducing the gross public debt from 105.34% of GDP in 2020 to an estimated 61.32% in 2024, while continuing efforts to strengthen fiscal discipline and improve transparency in public financial management.
She emphasized that these fiscal results, combined with the responsible regulatory and supervisory policies of the Central Bank, form the key foundation for maintaining financial stability and enhancing the resilience of Montenegro’s economic system in a challenging global environment.
Radović also focused on the role of the Central Bank of Montenegro as a pillar of institutional stability in the context of euroization, as well as in strengthening the resilience of the banking sector and supporting sustainable economic growth through responsible regulatory and supervisory practices.
“Central banks in small and highly open economies must be flexible and adaptable, but also firm in maintaining trust in the financial system,” Radović concluded. “Our focus at the CBCG is on preserving financial stability, improving the regulatory framework in line with European standards, modernizing payment systems, and strengthening institutional resilience in dealing with external shocks.”
