What is being negotiated?

The Member States of the European Union that have adopted the euro as their common currency form the Economic and Monetary Union (EMU). Membership in the EMU entails a single currency for participating Member States – the euro, a single monetary policy conducted by the European Central Bank (ECB), coordination among Member States in shaping economic policies, and coordination of fiscal policy through limits on public debt and budget deficits (the so-called Maastricht criteria).

Montenegro shares the objectives of the Economic and Monetary Union and is undertaking activities to align its monetary and fiscal policy with that of the EU. Montenegro’s existing monetary regime, having used the euro as legal tender since 2002 (“euroisation”), represents a specific feature in negotiations with the EU. As EU legislation does not provide specific criteria to be fulfilled for EMU membership in cases of unilateral euroisation, possible modalities for assessing compliance with the Maastricht criteria will be agreed in cooperation with the European Commission and the ECB. In order to meet these criteria by the time of accession to the EU, it is necessary to strengthen macroeconomic stability, ensure the stability of public finances, and enhance the competitiveness of the economy.

Sub-areas

The sub-areas of Chapter 17 are:

• Monetary policy

• Economic policy

When was the chapter opened?

Chapter 17 – Economic and Monetary Union was officially opened on 25 June 2018 at the Intergovernmental Conference in Luxembourg, and provisionally closed at the Intergovernmental Conference on 12 October 2026 in Luxembourg.

Opening benchmarks

Under this chapter, Montenegro had two opening benchmarks:

1. Montenegro was required to amend Articles 8 and 17a of the Decision of the Central Bank of Montenegro on Required Reserves of Banks, which allowed banks to allocate and hold up to 35% of their minimum reserves in the form of government treasury bills issued by the Government of Montenegro, in order to eliminate the possibility of holding bank reserves in the form of government securities.

2. Montenegro was required to adopt and submit to the Commission a detailed action plan defining clear objectives and timelines for full alignment of legislation with the acquis of the Economic and Monetary Union, as well as measures for developing the necessary administrative capacities to enable implementation of the acquis by the date of accession to the EU. The action plan was also required to include a timeline for achieving ESA 2010 standards with regard to the level of general government deficit and public debt, as well as for submitting pre-accession fiscal notifications, thereby strengthening the regular assessment of Montenegro’s economic performance in the context of EU pre-accession economic surveillance.

Both opening benchmarks have been fulfilled.

Closing benchmarks

Montenegro is intensively working towards meeting the European standards and creating the conditions for closing this chapter, which relate to the following:

1. Montenegro aligns its legal framework with the acquis to ensure full independence of the central bank, prohibition of monetary financing of the public sector, prohibition of privileged access by public authorities to financial institutions, and full integration of the Central Bank of Montenegro into the European System of Central Banks.

2. Montenegro has adopted the necessary constitutional amendments to ensure that the primary objective of price stability is defined in accordance with Articles 127(1) and 282(2) of the Treaty on the Functioning of the European Union (Article 143 of the Constitution).

3. Montenegro has aligned its legal framework to comply with the requirements for national budgetary frameworks, as provided for in Council Directive 2011/85/EU.

4. Montenegro meets the criteria of a functioning market economy.

5. Montenegro has agreed to the solution developed by the European Union on how to apply the EU framework for the adoption of the euro.

What are the activities in the upcoming period?

In the forthcoming period, the focus will be on further alignment of legal and strategic documents, implementation of regulations, and strengthening of administrative capacities.

Institutions/organisations participating in the negotiating group

The negotiator for Chapter 17, as well as the head of the Working Group, are from the Central Bank of Montenegro, while the contact person for Working Group 17 is appointed from the Office for European Integration.

In addition to representatives of the Central Bank of Montenegro, members of the Working Group include representatives of the following institutions and organisations: the Ministry of Finance, the Office for European Integration, the Statistical Office, the Employers’ Union of Montenegro, the Chamber of Economy of Montenegro, the Capital Market Commission, the Insurance Supervision Agency, and the Mediterranean University.

What are the benefits of this chapter for Montenegro?

The objective of EU policy in this chapter is to adapt Montenegro’s economy to the principles of an open market economy based on free competition, a single currency policy, and the achievement and maintenance of price stability. It also enhances the transparency and sustainability of public finances and improves the competitiveness of Montenegro’s economy.