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Crisis management and the banking system in Montenegro

  • Radoje Žugić


    (Minister of finance, Montenegro)

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    General deregulations of financial markets and improper risk management have seriously shaken banking systems worldwide during the global financial crisis. The key challenge in the upcoming period is to find an optimum balance between necessary regulation and avoiding overregulation that could jeopardize competitiveness of the banking system. The emphasis should not confine to the capital adequacy ratio but it should also cover liquidity because problems with insufficient liquidity could bring a crisis even to a bank that otherwise meets the statutory solvency criteria. The Montenegrin banking sector was no exception and it was severely hit by the crisis. This paper shows the movement of the banking system indicators through the following stages: preventive actions, strengthening of resilience, and crisis management. In addition, the paper shows the process of the banking system restructuring, followed by the conclusion that there can be no banking system restructuring without the restructuring of the real economy.

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    Article provided by Central bank of Montenegro in its journal Journal of Central banking Theory and Practice.

    Volume (Year): 2 (2013)
    Issue (Month): 1 ()
    Pages: 5-19

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    Handle: RePEc:cbk:journl:v:2:y:2013:i:1:p:5-19
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    1. Barth,James R. & Caprio,Gerard & Levine,Ross, 2006. "Rethinking Bank Regulation," Cambridge Books, Cambridge University Press, number 9780521855761, October.
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