The Central Bank of Montenegro reported that mandatory reserves held by commercial banks amounted to €327.8 million at the end of December 2025, underscoring continued stability in the country’s banking system. Mandatory reserves represent funds that banks are required to set aside as part of prudential regulation, serving as a core buffer for liquidity management and financial stability.
Reserve requirements are calculated based on banks’ deposit liabilities. Deposits payable on demand and deposits with maturities of up to one year are subject to a 5.5 percent reserve rate, while deposits with maturities longer than one year carry a 4.5 percent rate. Certain deposits with early withdrawal options are treated under the higher rate, reflecting their greater liquidity risk. This structure is designed to align reserve obligations with the risk profile of banks’ funding bases.
Of the total €327.8 million in mandatory reserves, around 74.6 percent was held on reserve accounts within Montenegro, while approximately 25.4 percent was placed on accounts held abroad. The calculation base for these reserves—the average level of total bank deposits during November 2025—stood at roughly €6 billion, with demand deposits accounting for the largest share, indicating strong liquidity on the liability side of bank balance sheets.
The reserve framework also provides limited flexibility for day-to-day liquidity management. Banks are permitted to use up to 50 percent of their mandatory reserves during the business day without interest, provided the withdrawn amount is fully returned by the end of the same day. This mechanism allows banks to respond to short-term liquidity needs while maintaining full compliance with regulatory requirements.
The level and composition of mandatory reserves point to a stable banking environment supported by solid deposit growth and prudent regulatory oversight. The reserve system remains a key instrument through which the Central Bank of Montenegro safeguards confidence in the financial system and mitigates liquidity risks without constraining normal banking activity.
