Statement of the Minister of Finance, Igor Lukšić, with regard to establishing the Proposal Law on Banking System Safeguards

The State will guarantee for all businesses and citizens deposits with Montenegrin banks. The Proposal will be forwarded to the Parliament according to the emergency procedure. These measures are adopted for preventive reasons, and not because there is a realistic need for that with all our banks being in a quite solid position. The State will, according to the new law, guarantee for interbank loans, and will be able to approve loans to banks for liquidity maintenance, and also provide additional capitalization to them. Banks will, in case of use of these funds, be obliged to pay specific interest and their owners will need to pledge their shares. We opted for this step, since according to our opinion it is necessary to define a preventive legislative framework for specific measures we are proposing by this law, and all in view of the global economic crisis which caused the richest countries of the world to react. One set of measures is from the area of monetary policy, while the measures of fiscal policy will be shaped by the Budget Law. This Law guarantees for deposits and provides support to the liquidity of banks. We are creating conditions so the Government may issue guarantees to support banks in case of interbank borrowings. This Law envisages that, if a bank may not respond to the demand of the Central Bank for additional capitalization for the purpose of achieving the corresponding capital adequacy, the State may use funds it has available to provide additional capitalization to banks, and thereby achieve the level of capital adequacy.