The Central Bank of Montenegro (CBCG) has reported that the mandatory reserves held by commercial banks in Montenegro amounted to €326.38 million at the close of January 2026. These reserves are crucial for maintaining financial stability and facilitating effective liquidity management within the banking sector, as stipulated by the CBCG’s monetary policy framework.
According to the reserve requirement regulations, banks are obligated to set aside a portion of their deposits as mandatory reserves, which can be held either domestically or in foreign accounts managed by the Central Bank. As of the end of January, approximately 74.47 percent of these reserves were maintained in local reserve accounts, while 25.53 percent were deposited in CBCG accounts abroad.
The calculation for the reserve requirement is based on the average level of total bank deposits, which stood at about €5.98 billion at the end of January. Within this total, demand deposits represented a significant 84.94 percent, whereas time deposits accounted for the remaining 15.06 percent.
Under CBCG guidelines, banks must adhere to a reserve ratio of 5.5 percent for 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 directly influence the amount of mandatory reserves banks are required to hold.
Additionally, banks have the flexibility 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 same business day. This provision allows banks to manage short-term cash flow variations without compromising the overall stability mandated by the reserve requirement system.
The current levels of mandatory reserves and associated regulations form part of CBCG’s comprehensive monetary policy strategy aimed at fostering prudent liquidity conditions within Montenegro’s banking landscape and ensuring alignment with regional financial stability practices.
