The upcoming entry of Montenegro into the SEPA (Single Euro Payments Area) system at the beginning of next year marks an important milestone for the modernization of the country’s financial sector and its alignment with European standards. This move will integrate Montenegro into a unified European payment market, offering benefits to both the economy and citizens through faster, cheaper, and more secure transactions. SEPA facilitates cross-border payments in euros across 36 member countries, reducing transaction costs and enhancing the efficiency of the payment system.
In July, the Central Bank of Montenegro (CBCG) formally submitted a request for membership in the euro payment area on behalf of the country.
Gert Jan Koopman, Director of the General Directorate for Neighborhood and Enlargement Negotiations (DG NEAR), recently announced that Montenegro is expected to be the first country in the Western Balkans to join SEPA on January 1st.
Benefits
The introduction of SEPA instant payments will enable even quicker transactions, providing businesses with a competitive edge in the European market. This alignment with European norms is a crucial step on Montenegro’s path to EU membership.
Economic analyst Mirza Mulešković stated that Montenegro’s entry into the SEPA system will significantly enhance financial flows within the country, allowing for more efficient and quicker payments for all entities. He emphasized that reducing transaction costs will be a key advantage, positively impacting both the domestic economy and the everyday lives of citizens. Additionally, Mulešković pointed out that this step will strengthen Montenegro’s position as a country striving for full EU membership, as the SEPA system is a cornerstone of integrating all EU countries into a unified financial space.
“By joining SEPA, Montenegro enters a network connecting all EU countries, sending an important message about the security of our banking system and the reliability of our regulations. To become part of this system, it was essential to align our legislation with European standards, a process that has been ongoing for several years,” Mulešković explained.
He also highlighted that this move is crucial not only for European integration but also for attracting foreign investments.
“More efficient payments and lower transaction costs give Montenegro another competitive advantage in the market, which can attract more investors and create new jobs. The introduction of the SEPA system enables faster and cheaper business operations, which is a key factor for any economy looking to develop and be competitive in the European and global markets,” Mulešković added.
Impact of the CBCG
He praised the work of the Central Bank of Montenegro (CBCG), which he described as a key player in this process.
“This is not a result achieved overnight. The CBCG has diligently worked for several years to harmonize our legislation with EU laws, and reports from the European Commission have recognized the CBCG as the institution that has most aligned its processes with European standards, which unfortunately has not been the case with many other state institutions,” Mulešković asserted.
He expressed hope that the CBCG’s efforts would result in increased investment inflows and economic growth.
“These results are the fruit of years of hard work and dedication. The adoption of the SEPA system will not only facilitate business for companies and citizens but also reduce costs for public institutions, which will positively impact the entire economy of Montenegro,” Mulešković concluded.
This process, according to Mulešković, demonstrates that Montenegro is seriously committed to adopting European norms and standards, which is a critical element on the path to full EU membership.
SEPA is becoming increasingly significant for businesses and individuals within the eurozone, allowing for faster and more efficient cross-border payments. SEPA facilitates seamless euro transactions in 36 countries, including EU and non-EU members. By standardizing payment processes, transaction costs are reduced, and transparency is increased, making it particularly attractive for international business operations.
By 2023, SEPA credit transfers accounted for 22% of cashless payments in the eurozone, while direct debit transfers made up 15%, with card payments dominating at 54% of total transactions. This system processes over 67 billion cashless transactions annually, and in the first half of 2023, there was a 10.1% increase in such payments, highlighting its growing impact. The total value of SEPA transactions in the first half of 2023 reached approximately €111 trillion.
The integration of SEPA instant payments is expected, which will make euro transactions even faster, with EU banks required to support instant payments by the end of the year. This development will enhance liquidity and provide a competitive advantage for European businesses by enabling near-instant settlements, further reducing costs and improving payment security.
These innovations position SEPA as a key infrastructure for economic integration within Europe, bringing benefits to businesses, individuals, and public institutions.
