The Central Bank of Montenegro (CBCG) has released data showing that mandatory reserves held by commercial banks in the country totalled €326.38 million at the end of January 2026. These reserves represent the funds that banks are required to set aside under the CBCG’s monetary policy framework to support financial stability and ensure prudent liquidity management in the banking system.
Under the reserve requirement rules, commercial banks must allocate a portion of their deposits into mandatory reserves held either domestically or with the Central Bank’s foreign accounts. Of the total reserve amount at the end of January, about 74.47 percent was held on reserve accounts within Montenegro, while 25.53 percent was held on CBCG accounts abroad.
The reserve requirement base is calculated on the average level of total bank deposits during the relevant period, which at the end of January stood at approximately €5.98 billion. Within that base, demand (sight) deposits constituted nearly 84.94 percent, with the remaining 15.06 percent comprised of time (term) deposits.
According to CBCG’s reserve framework, banks must apply a reserve ratio of 5.5 percent on demand deposits and on time deposits with a maturity of up to one year, and 4.5 percent on time deposits with a maturity longer than one year, which together determine the amount of mandatory reserve they are required to hold.
Banks are permitted to temporarily use up to 50 percent of their mandatory reserves to manage daily liquidity needs, provided that they restore the reserves by the end of the same business day. This operational flexibility helps banks manage short-term cash flow fluctuations without undermining the stability function of the reserve requirement system.
The level of mandatory reserves and underlying regulations are part of CBCG’s broader monetary policy toolkit aimed at ensuring prudent liquidity conditions in Montenegro’s banking sector and aligning domestic practices with broader regional norms for financial stability.
