The Central Bank of Montenegro (CBCG) has disclosed that the mandatory reserves maintained by commercial banks in Montenegro amounted to €326.38 million as of the end of January 2026. These reserves are crucial for ensuring financial stability and effective liquidity management within the banking sector, as dictated by the CBCG’s monetary policy.
According to reserve requirement regulations, a portion of banks’ deposits must be allocated to mandatory reserves, which can be held either domestically or in foreign accounts with the Central Bank. At the close of January, approximately 74.47 percent of these reserves were kept in accounts within Montenegro, while 25.53 percent were deposited in CBCG accounts abroad.
The calculation for the reserve requirement is based on the average total bank deposits during the relevant period, which reached about €5.98 billion at the end of January. Of this total, demand (sight) deposits made up nearly 84.94 percent, with time (term) deposits constituting the remaining 15.06 percent.
Under CBCG’s guidelines, banks are required to maintain a reserve ratio of 5.5 percent on both demand deposits and time deposits with maturities up to one year, while a lower ratio of 4.5 percent applies to time deposits with maturities exceeding one year. These ratios determine the necessary amount of mandatory reserves each bank must hold.
Banks are allowed to utilize up to 50 percent of their mandatory reserves temporarily to address daily liquidity needs, provided they replenish these reserves by the end of the business day. This flexibility enables banks to manage short-term cash flow variations without compromising the stability intended by the reserve requirement system.
The current levels of mandatory reserves and associated regulations form part of CBCG’s comprehensive monetary policy strategy, designed to ensure sound liquidity conditions in Montenegro’s banking industry and align local practices with regional standards for financial stability.
