Dr Irena Radović, Governor of the Central Bank of Montenegro
Dr. Irena Radović on safeguarding stability and modernising Montenegro’s financial system
In an interview for Diplomacy & Commerce Montenegro, the Governor of the Central Bank of Montenegro, Dr Irena Radović, discusses the resilience of the financial system, the results of SEPA membership, the forthcoming TIPS Clone instant-payment system, digital operational resilience and the country’s path towards the European financial area.
How do you assess the current stability and resilience of Montenegro’s financial system amid global economic and geopolitical uncertainty?
Montenegro today faces a period of heightened global uncertainty with a stable and well-capitalised banking sector, strong liquidity, and institutions that are continuously strengthening their alignment with European standards. This is particularly important at a time of pronounced global uncertainty, geopolitical tensions, changing financing conditions, and a slowdown in parts of the European economy. It is precisely in such an environment that the stability of the financial system represents one of the basic preconditions for preserving confidence, investment and economic growth. For a small, open and euroised economy such as Montenegro, financial stability is not merely an economic question, but a question of the country’s overall resilience. In conditions of limited monetary space, it rests largely on the resilience of the banking sector, the quality of the regulatory and supervisory framework, and the ability of institutions to recognise and mitigate risks in good time. That is precisely why the CBCG acts with a clear priority: to preserve a safe, predictable, and credible financial system, capable of responding to both external shocks and the challenges of the domestic environment. We mustn’t be the only ones offering such an assessment today. International institutions confirm it as well. In the European Commission’s conclusions from May’s Economic and Financial Dialogue with the EU in Brussels, the Montenegrin banking sector was assessed as stable, profitable and well-capitalised. This is strong confirmation that Montenegro, despite complex circumstances, has managed to preserve financial stability and build a system that can provide reliable support for economic development and strengthen investment confidence.
What does a stable and well-capitalised banking sector concretely mean for citizens, the economy and international investors?
A stable and well-capitalised banking sector represents one of the key foundations of a country’s overall economic security. For citizens, it means the safety of deposits, the continuity and reliability of financial services, and greater confidence. For the economy, it means the availability of financing, an efficient payment system and the ability of banks to support investment and development cycles. For international investors, a stable and well-regulated banking sector means a predictable business environment, lower operational risk, and a clearer assessment of the long-term sustainability of investment. Investors today do not seek only markets with growth potential. They seek institutions they can trust. That is precisely why independent and strong institutions, the stability of the financial system, the quality of supervision and alignment with European rules are among the most important elements of a country’s investment attractiveness. The banking sector in Montenegro plays a central role in financing the economy, which is why its stability has broader significance for development. It is not enough for the sector to grow; it is equally important that this growth be founded on healthy bases, with the preservation of asset quality, adequate capitalisation and high liquidity. It is precisely this balance that the CBCG continuously monitors through supervision, macroprudential measures, and the further alignment of the regulatory and supervisory framework with European Union standards. It is particularly important to emphasise that stability is measured not only by current indicators but, above all, by the sector’s ability to absorb potential future shocks. In that sense, the strong capital position of banks, the historically low level of non-performing loans, good liquidity, and the sector’s profitability represent key shock absorbers and confirm its resilience. For investors, the most important message is that Montenegro’s financial system operates in accordance with European Union rules and standards. This reduces the perception of risk, strengthens the country’s institutional credibility and improves its position as a reliable and attractive investment destination.
Montenegro has become part of the SEPA area. What are the most important results after the first eight months of implementation, and how do they change Montenegro’s position in the European financial space?
Accession to the SEPA area represents one of the concrete benefits of European integration that citizens and the economy feel daily, even before membership of the European Union itself. This is a reform that does not merely represent a technical improvement of the payment system, but substantially enhances the quality of financial infrastructure, directly strengthens the competitiveness of the economy and brings measurable benefits to the economy and to citizens. The results clearly confirm the significance of this reform. In the first eight months, more than 123,000 SEPA transactions were carried out, with a total value of over 2.3 billion euros. Citizens and the economy achieved more than 6.2 million euros in savings. In contrast, with full digitalisation and the transfer of all transactions to SEPA electronic channels, annual savings could exceed 12 million euros. SEPA is not merely a payment reform. It represents the practical integration of Montenegro into the single European payments market before membership of the European Union itself. More concretely still, the average fee for SEPA transactions since their implementation began is 5.97 euros, while the average fee for SWIFT transactions in 2024 was 73.4 euros. This means that SEPA transactions are more than twelve times cheaper. It is particularly important to note that, when using digital channels, the cost of a SEPA transaction for amounts up to 20,000 euros is just 1.99 euros. In comparison, the first daily transaction up to 200 euros is free of charge. This shows the extent to which SEPA directly reduces costs, accelerates business and increases the efficiency of financial flows. For the economy, particularly for companies operating with partners in the EU, SEPA means lower operating costs, simpler cash flow management, greater predictability, and easier inclusion in European value chains. For citizens, it means cheaper, more transparent and safer payments abroad. For the international business community, SEPA is proof that Montenegro can successfully implement complex European regulatory, technical and operational standards. This sends a clear message that the country is ready for deeper integration into the European financial space. According to a World Bank report, following Montenegro’s accession to SEPA, it became the country with the lowest cross-border payment costs to the European Union in the Western Balkans. This further strengthens its investment attractiveness and credibility on the path towards the EU.
After SEPA, the TIPS Clone instant-payment system has been announced and is planned for 20 July 2026. What does this project bring to citizens, the economy and the financial sector?
TIPS Clone is the next major step in the modernisation of Montenegro’s payment system. If SEPA reduced the cost of international payments, TIPS Clone would change how citizens and the economy conduct everyday domestic payments. While SEPA enabled cheaper and more efficient payments towards the European area, TIPS Clone will bring instant payments within the domestic system, in real time, 24 hours a day, seven days a week.The full market application of the TIPS Clone platform, which will be aligned with TIPS’s operational rules and work practices, is planned for 20 July 2026. The project is being carried out in partnership with the Bank of Italy – the technical provider of the TIPS service within the Eurosystem payment infrastructure – with the support of the European Central Bank and the World Bank. Montenegro will be among the first in the region to have an instant-payment infrastructure based on Eurosystem technology. For citizens, this means a new generation of payment services: transferring money within a few seconds. For the economy, particularly for small and medium-sized enterprises, the trade and service sectors, it means faster liquidity management, more efficient settlement of obligations, and better predictability of cash flows. In combination with SEPA, TIPS Clone represents an important step towards the full modernisation of Montenegro’s payment system. It accelerates financial flows, encourages digitalisation, increases the competitiveness of the financial sector and further brings Montenegro closer to the European financial area.
How much does progress in European integration and alignment with EU standards contribute to the confidence of the international business and diplomatic community in Montenegro?
European integration is not merely Montenegro’s strategic goal. It represents the country’s most important development project. Every new alignment with European rules increases the predictability of the business environment, strengthens investor confidence and reduces the perception of risk. The confidence of investors and international partners is built through the strength of institutions, regulatory alignment, objective supervision and operational compatibility with the European market. The greater the degree of that alignment, the lower the perception of risk and the stronger the readiness for long-term business and investment engagement.Today, the CBCG plays one of the key roles in the negotiation process, through the chapters within its competence and through preparations for future membership of the European System of Central Banks. Through intensive alignment of legislation with the EU acquis, the modernisation of payment infrastructure, and the strengthening of institutional capacities, we show that we do not regard European standards as a formal obligation for the future but as a framework for action today. SEPA is the best example of such an approach, and TIPS Clone its logical continuation. Montenegro is not preparing for European standards after accession to the European Union. We are introducing them already today. Our goal is for Montenegro to be recognised as a country with a credible, stable and modern financial system, integrated into European financial flows.
Digitalisation brings new opportunities, but also new risks. How does the CBCG approach the digital and operational resilience of the financial system?
The digitalisation of the financial sector opens up great scope for more efficient, cheaper and more accessible services, but at the same time brings new risks – from cyber threats and operational disruptions to greater dependence on technological infrastructure and external providers. That is why digital transformation cannot be sustainable without a strong framework for digital and operational resilience. At the same time, the European Union is significantly raising the standards of digital resilience through the DORA regulatory framework, and the CBCG aligns its activities and expectations towards the sector with that approach. Confidence in digital financial services is built not only through innovation but, above all, through the security and reliability of the system. The CBCG approaches this question systematically and over the long term. The modernisation of the payment system, accession to SEPA, the preparation of the TIPS Clone platform, the development of electronic services and alignment with European standards are part of the same reform agenda. Payment infrastructure is particularly significant in this respect. Payment systems represent a public good on which the daily life of citizens and the functioning of the economy depend. In the digital age, it is not enough merely to prevent risks; the system must be able to recognise them in good time, absorb them and ensure rapid recovery and continuity of functioning. That is why the CBCG works in parallel to improve the regulatory and supervisory framework, strengthen operational and technical capacities, and align with best European practices.
What are the CBCG’s key priorities in the period ahead, and what message do you send to the international business community when it comes to the security and attractiveness of Montenegro as an investment destination?
Our ambition is clear: for Montenegro to enter the European Union with a financial system that is ready – in the quality of its institutions, regulatory framework, and infrastructure – to function as part of the European financial space from the first day of membership. The CBCG’s priorities in the period ahead remain the preservation of financial stability, the further strengthening of supervision, the successful implementation of the TIPS Clone system, the continuation of alignment with the EU acquis and preparation for future integration into the European System of Central Banks. In parallel, we continue to build an institutional framework that encourages sustainability, efficiency, and higher-quality financial services, because contemporary competitiveness no longer rests solely on the cost of capital but also on the quality of institutions, the speed of the system, and the reliability of the rules. We believe that it is precisely the combination of stable institutions, modern financial services and a clear European perspective that will be one of the most important factors of Montenegro’s future competitiveness.