Here is the rewritten article in Markdown format:

Central Bank of Montenegro Under Scrutiny: Governance and Supervision Concerns

The Central Bank of Montenegro (CBM) has been facing criticism over its handling of recent legislative changes and staffing issues. While the bank’s operational independence is ensured by legislation, some recent actions have raised concerns about its ability to operate effectively.

Challenges in Governance and Supervision

A new law has been passed, requiring the CBM to supervise the implementation of a measure that retroactively alters loan agreements entered into by one bank, potentially resulting in losses. This decision could be seen as compromising the bank’s operational independence and setting a precedent for future similar legislation.

Staffing Challenges

The CBM is facing staffing challenges, with seven vacancies currently existing in its banking supervision department. The bank has also struggled to fill these positions, which has raised concerns about its ability to effectively supervise the growing number of banks in the country.

Recommendations

To address these concerns, the assessors recommend:

• The CBM should not use this decision as a precedent for future similar legislation.
• The bank should prioritize filling its current vacancies and providing career paths for specialist staff.
• Staff protection legislation should be extended to cover omissions made by staff while discharging their duties in good faith and to the supervisor itself.

New Bank Licensing: Concerns over Viability of New Banks

The CBM has recently licensed three new banks, with a fourth application currently being considered. While all applicants have met the necessary licensing criteria, concerns remain about the future viability of these new banks, given the current business climate.

• A more rigorous assessment by the CBM of business plans is warranted, particularly when new applicants identify similar opportunities to existing banks.
• The bank should also consider assuming a role in approving senior management positions at prospective banks.

Concerns over Ownership Structure

The CBM recently rejected a license application due to concerns over the ownership structure of the proposed bank. Up to 12 prospective applicants have withdrawn from the process at early stages in recent years, highlighting the challenges faced by the regulator.

Conclusion

Overall, these concerns highlight the need for the CBM to prioritize its governance and supervision functions to ensure the stability and integrity of Montenegro’s banking system.