Given the astounding emphasis the academic community and indeed the wider world are placing on the issues of increasing financialization and connectivity of finance on a global scale, how timely is Juliet Johnson's Priests of Prosperity, which highlights not only the intricacies of central bank development and practice but also the role of an international community of banks in shaping this development. The book provides an illuminating comparison of central bank evolution and transformation across a number of postcommunist countries, including Hungary, Kyrgyzstan, and Russia. Numerous studies on western European central banks demonstrate the scholarly interest in the complex role of these institutions and their impact on domestic business and public concerns; however, this tale of central banking is unique, a much-welcomed new perspective of finance and policy in emerging economies.
Johnson begins by examining the international central banking community and central bankers as pivotal professional actors within this sphere. Here we get a glimpse of the attitude, practices, knowledge, and culture of this unusual group. The author's adaptation of the wormhole network to this case provides an interesting perspective on ties within this community, making tangible these very complex relationships. This general survey of central banking also includes a discussion of global economic developments in governance and policy (Bretton Woods, International Monetary Fund [IMF], creation of the euro), which sets the context for the following narrative of central bank development and transformation in the postcommunist world.
The sections that follow are grounded in an impressive set of illuminating interviews with central banking actors, including the central bankers themselves. These interviews provide privileged insight into a world unknown to many. The second chapter begins our journey into central bank transplantation, outlining the ideas, practices, and policies that were transmitted (and also translated) across borders by the international central banking community. While this initially demonstrates the influential role played by this community, the next chapter delves into the adaptations that occurred across central banks in the postcommunist world. The differences in political frameworks between East and West and between countries in the former Soviet Union created issues related to bank independence. Johnson presents four comparative examples (Hungary, Czechoslovakia, Russia, and Kyrgyzstan) of how central bank independence was achieved. This chapter draws out the ways in which initial political/economic development, international cooperation, and perhaps also culture impacted the independence process.
The comparative road to independence is followed by two chapters that provide intimate details of the pressures placed on newly formed central banks by the international banking community. Johnson quotes the Hungarian bank governor Gyorgy Suranyi: “If you are willing to join the club, you will be supported” (p. 82). These chapters highlight the role of global governance (IMF, World Bank, etc.) among a small and elite community that included many western European central banks. In these chapters, the author draws out the intricacies of each bank's development and transformation narrative. Important correlations are made between international cooperation on the implementation of central bank models and domestic support for such models; as Johnson writes, “a transplant must put down solid roots in its new environment, stretching beyond its institutional base, in order to survive and thrive” (p. 128). Interestingly, a clear breakdown of international relationships can be seen in the discussion on “the Battle for the Euro,” where Johnson highlights the discord among European Union members and the wavering support to central and eastern European central bankers (p. 166).
The final two chapters of this book examine the implementation of central banking models in trickier environments (those of Russia and Kyrgyzstan) and the impact of the global financial crisis on central banking in the postcommunist world, respectively. The penultimate chapter highlights the difficulties faced in environments whose political structures and cultures differed greatly from those of their Western advisors, creating a slower process of transplantation, which came up against authoritarian governments, technical inadequacies, and retention of Soviet-era banking practices. The final chapter swings the central banks into current perspective; the financial crisis in its severity acted as a sort of gauntlet of financial stability, one that few (perhaps no) central banks made it across in one piece. This chapter links together many aspects of this text and, in doing so, makes for a reflective and important concluding chapter. Through the financial crisis we can reflect on the process of transplantation, problems faced through integration, and of course, the importance of the transnational central banking community through all of this.
The final thoughts in this volume reflect both negative and positive outlooks. On the one hand, Johnson describes the financial nationalism that has emerged from Putin's government and its threatening to break ties with the West. On the other, despite several bumps in the road, Johnson shows that the postcommunist central banks emerged from the crisis as well-integrated institutions, demonstrating shared policy and practices developed successfully since the 1990s. In this monograph, Johnson presents a detailed and compelling study that is, above all, timely. As she writes, “today's community [of central banks] is far stronger, but arguably also faces greater and more complex challenges” (p. 260). The importance of international cooperation in such turbulent times as well as the use of experienced and learned advisors on issues such as financial stability and governance are undeniably important; in this monograph, Johnson, through careful analysis of postcommunist central bank development, shows us why.
