The theory of central banking has received an inordinate amount of attention over the past few decades from economists, sociologists, political scientists and indeed politicians. The practice of central banking has received much less, so that the appearance of a book called “Central Banking and Monetary Policy Implementation” is very welcome. it is a collection of chapters on monetary policy implementation in eleven countries, in alphabetical order, together with an introduction by the editors. The authors seem to have been allowed quite a bit of discretion in exactly what they wrote about, and the subject matter varies somewhat from chapter to chapter.

A is for Argentina – pre-Milei Argentina, in fact. The chapter by Juan Matias de Lucchi, Ariel Dvoskin and German D. Feldman describes monetary policy implementation in the Covid pandemic, which occurred during the presidency of Cristina Fernandez. The central bank financed the government deficit and special lending facilities established, operated by commercial banks, subject to maximum lending rates. Credit rating criteria were suspended ‘to avoid undesired credit rationing’. Exchange controls were tightened to protect the official exchange rate and the reserves. Not surprisingly Argentina became more dollarised.

A is also for Australia. To my mind, the most interesting feature of Peter Docherty’s long chapter is his account of monetary policy during the Covid lockdowns. The Reserve Bank of Australia, having reduced short-term interest rates by as much as it could, but wanting to ease policy further, announced a target yield for a 3-year government bond, supported by a bond purchase programme. It was wiser than other central banks in making clear that its objective was for a bond yield at a maturity within the period during which it expected to maintain short-term interest rates at low levels: it thus gave a clearer signal of its intentions than those which bought bonds of all maturities, including very long ones.

Brazil had seven currencies in the three decades between 1964, when its central bank was set up, and 1994. The new currency introduced in 1994, the real, has happily survived the ensuing three decades. Sylvio Antonio Kappes’s chapter reviews inflation targeting in Brazil and describes how the central bank has sterilised the remarkable increase in its gold and foreign exchange reserves. C is for Canada. The chapter by Guillermo Matamoros is at pains to make a point which practising central bankers have known about for a very long time, but which theorists have resolutely ignored, namely that you can change the level of short-term interest rates without changing the amount of reserve balances in the banking system.

C is also for China. Two economists from the Peoples’ Bank of China, Hui Yuan and Geyang Xie, give a clear and interesting account of how monetary policy and its implementation have evolved since the Peoples’ Republic was established in 1949. Since the economic reform programme began in 1978, monetary policy has moved gradually but decisively away from central control and towards market-based methods of implementation, and the Peoples’ Bank of China has evolved from a Communist-style all-purpose monobank, with a national network of branches, into a central bank on the capitalist model.

The chapter on the euro area, by Eladio Febrero of the University of Castilla-La Mancha, describes the monetary policy operations of the European Central Bank immediately before, during, and after the financial crisis. It is a fairly conventional account, but in my opinion it takes too little account (none in fact) of the tightening of bank regulation after the financial crisis and the ensuing restriction of credit, which the ECB, despite its considerable efforts, was unable entirely to counteract, and which must have retarded economic recovery.

The chapter on Mexico, by Noemi Levy Orlik and Jorge Bustamente, is long on theory, like the one on Canada. The main general point is that emerging countries which have adopted inflation targets, including Mexico, feel obliged also to pursue exchange rate stability (“fear of floating”), because the pass-through from the exchange rate to prices is typically very strong, and therefore accumulate large amounts of reserves (gold or foreign exchange), which are a burden because the necessary borrowing costs more in interest than the reserve assets yield. It’s certainly true that holding reserves is costly, and not only for emerging countries, but the account begs the question whether Banco de Mexico really needed to accumulate so many reserves, or whether it could have allowed the peso to float more freely.

Two academics, Salewa Olawoye and Adesuwa Erediauwa, contribute a chapter on Nigeria, which is mainly a brief historical review of Nigerian monetary policy since 1959, when the central bank began operation. It concludes with two recommendations for the central bank. One is a low carbon bias in monetary policy, but it doesn’t explain why this should be the central bank’s responsibility or what it might mean in practice. The other to encourage development of domestic industries other than oil. This is certainly a worthy objective, but surely not one which the central bank can pursue on its own.

P is for Poland, and for personal disclosure. I advised the National Bank of Poland on monetary policy in the 1990s. Moreover, Zbigniew Polański, the author of the chapter ‘Monetary policy under permanent excess liquidity: the case of Poland’, is a friend of mine and I commented on an earlier draft of it. I will therefore merely say that it describes Poland’s monetary policy implementation since the end of the Communist era, and that it is a very interesting subject.

The most surprising things about the chapter on Russia by Vadim Grishchenko, Grigory Zhirnov and Vasily Tkachev are, firstly, that it is there at all, and secondly, that it is fairly candid, though it refers to the war in Ukraine coyly as the ‘geopolitical crisis’. It mainly consists of a clear and methodical account of the development of financial markets and monetary policy in Russia since 1992, though it would have been interesting to know more about the banking crisis of 2008. Between 2009 and 2015 the ‘neutral band’ within which the exchange rate was allowed to float was gradually widened. Full inflation targeting was introduced in 2015 after a large rate hike in December 2014. After the invasion of Ukraine and the ensuing sanctions, the exchange rate and government bond prices fell heavily, exchange controls were imposed and interest rates were hiked. The exchange rate and government bond prices recovered. The central bank is intervening in the foreign exchange market but now using renminbi instead of western currencies.

Finally, Sergio Rossi of the University of Fribourg provides an interesting and clear account of Swiss monetary policy over the past fifty years. Switzerland’s success in maintaining price stability has exposed it to repeated dilemmas caused by external demand for Swiss francs which have threatened to push the exchange rate to levels which would wipe out large parts of Swiss industry. Rossi is critical of the negative interest rate policy which the National Bank adopted from 2014 to 2022, which he says had bad side-effects, e.g. in the real estate market.

There are a few recurrent themes. One of them is that several of the countries discussed in the various chapters have accumulated large increases in their reserves since the financial crisis. This may be interpreted as a kind of covert protectionism, but another plausible explanation is that they were frightened by the outflows of dollars from their commercial banks during the financial crisis, and anxious to be better protected against any repetition. Another is the widespread use of quantitative easing of various kinds following the financial crisis. Both developments have put central banks in the unfamiliar position of borrowing from their banking systems to determine short-term interest rates, rather than lending to them for that purpose. There is a great deal of interesting information in this book – much more than I can summarise in this already-long review. its appeal is bound to be mainly to specialists, but they will find a great deal of value in it.